Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

HAMPSHIRE BILL [Lords]

Order for Second Reading read.

To be read a Second time upon Thursday.

Oral Answers to Questions — INDUSTRY

Steel Industry

Mr. Hal Miller: asked the Secretary of State for Industry whether he has received the corporate plan for 1983 of the British Steel Corporation.

Mr. Canavan: asked the Secretary of State for Industry whether he will make a statement about the future of the steel industry.

Mr. Eggar: asked the Secretary of State for Industry if he will make a statement on the future of the British Steel Corporation.

Mr. Hooley: asked the Secretary of State for Industry when he expects to receive a revised corporate plan from the chairman of the British Steel Corporation.

17. Mr. Teddy Taylor: asked the Secretary of State for Industry when he next plans to meet the chairman of British Steel to discuss the future of the steel industry.

The Secretary of State for Industry (Mr. Patrick Jenkin): I am currently discussing with BSC the basis on which its corporate plan for 1983 to 1986 should be drawn up. I hope to make a statement before the Christmas Recess.

Several Hon. Members: rose——

Mr. Speaker: Order. I propose to call first the five hon. Members whose questions are being answered.

Mr. Miller: Will my right hon. Friend give an assurance that the discussions relate to the steel industry as a whole, not just to the BSC? Will he ensure that the interests of the private steel industry, in particular, are considered and that a basis of competition is established which means that those interests will not be put out of business by subsidies from the taxpayer to the BSC?

Mr. Jenkin: I have absolute sympathy with what my hon. Friend says. The immediate purpose of our discussions is to agree the assumptions on which the British Steel Corporation's plans should be based. In looking at the market and the future disposition of Government funding, we are paying the closest possible attention to the needs of the private sector.

Mr. Canavan: Is the Secretary of State aware of the total opposition in Scotland to the closure of Ravenscraig, which would destroy at least 13,500 jobs and devastate the whole Scottish economy? Is the right hon. Gentleman further aware that any shabby compromise involving partial closure is also not acceptable?
As the Secretary of State for Scotland put his job on the line over the future of Ravenscraig and as the chairman of the Scottish Tory Party can stand up in public and say that closure is not acceptable to his party, will the Secretary of State now make a similar statement that he, too, would resign rather than see the closure of Ravenscraig?

Mr. Jenkin: I assure the hon. Gentleman that no decisions have been taken about the future of Ravenscraig or any other of the four major integrated plants, despite some press speculation to the contrary. Of course, we are having to look in the medium term at the appropriate


configuration of the British Steel Corporation's steelmaking capacity. I do not think that the hon. Gentleman would expect any less. I assure him that we are taking full account of all the factors that bear upon what, by any standards, is an important complex of decisions that need to be taken.

Mr. Eggar: Was not the contraction that has taken place in the British steel industry inevitable given the complete lack of competitiveness of the British Steel Corporation from the start?

Mr. Jenkin: Part of the difficulty over the past two or three years within the British Steel Corporation arose from the long delay that occurred under the Labour Government when contraction plans, which should have been put forward in the mid-1970s, were repeatedly delayed. When the Conservative Government took over, they faced a corporation that had substantial overcapacity. It was substantially overmanned, totally bankrupt and in need of huge sums of public money to save it. It is great credit to the management of the British Steel Corporation that so much progress has been made.

Mr. Teddy Taylor: Does my right hon. Friend not feel entitled to resist further steel closures in Britain until other EEC countries show some sign of matching these with cuts of their own? Is it not outrageous that since 1979 more steel jobs have been lost in Britain than in the rest of the Common Market put together?

Mr. Jenkin: My hon. Friend is right. I have made this point not only to the Commission but to my colleagues on the Industry Council. There is no question but that there has been a very uneven response to the Commission's plans for linking State aids with the reduction of capacity. We have done a great deal. We now look to our partners to play their part.

Dr. Bray: Will the Secretary of State confirm that the assumptions that he is discussing with the British Steel Corporation include its competitiveness, output and productivity and the output of steel-consuming industries for the next 10 or 20 years? If not, how can the right hon. Gentleman reach a decision on the major capacity that exists?

Mr. Jenkin: The talks cover all the items to which the hon. Gentleman has referred. It would be beyond the wit of mankind to look 20 years ahead. It is as much as one can do to look five or six years ahead to see what the market will be like in the light of productivity trends, the trends of user industries and the world-wide trend of simply using less steel as other materials supplant steel in the manufacture of a wide range of artefacts. We are struggling to do our best. There has been delay because we want to ensure that we get the assumptions right.

Mr. Michael Brown: After all the sacrifices and courage shown by the Government over the past two or three years in trying to make the British Steel Corporation efficient, would it not be a travesty if all that were to come to nothing because the British Steel Corporation was not given a chance to implement the full corporate plan involving the 14·4 million tonnes that was envisaged two and a half years ago by the chairman?

Mr. Jenkin: The market prospects for steel have changed markedly in the past two and a half years, and even more recently than that. In 1981 the British Steel

Corporation produced 13·6 million tonnes of liquid steel with a plant capacity of 21·3 million tonnes a year. Recently, output has fallen to 10 million tonnes a year. There are comparable figures for the private sector. There is a wide margin for flexibility. We have to consider what the market for steel is likely to be three, four or five years ahead. It is sensible to plan upon that basis.

Mr. Roy Hughes: Is it not wrong to keep our vital steel industry perpetually on tenterhooks? Does that not have a grave effect on morale in the industry? The industry now deserves a substantial vote of confidence. Could not the Secretary of State best do that by restricting imports? I should like him to look at the 67 per cent. of imports coming in from the Common Market. The Government could do a great deal to stimulate growth in the economy.

Mr. Jenkin: I understand the problem for those who work in the steel industry. We are trying to reach decisions as soon as possible. I need no lectures about imports from the hon. Gentleman. We have imposed anti-dumping duties on imports from Spain and Brazil. We have imposed quotas on imports from Czechoslovakia and Bulgaria.

Mr. Hughes: What about the EC?

Mr. Jenkin: Anti-dumping investigations have been started recently against Canada, Argentina, Venezuela and Brazil. That is why I have been pressing the Commission, with some success, to take a much tougher line in enforcing article 58 quotas and adhering to the Community's steel price regime. That is the way to prevent the disruption of the steel market in this country.

Mr. Maclennan: What steps is the Secretary of State taking to stimulate demand for steel? How has he responded to Ian MacGregor's proposals for the Channel bridge and tunnel project?

Mr. Jenkin: The amount of steel that would be involved in the Euro-route project that Mr. MacGregor is championing would make only a small dent in the problem that we face. It may have merits in its own right, but that is not for discussion today.
With regard to demand for steel generally, I hope that the hon. Gentleman will applaud, as I do, the 26 per cent. increase this year in capital investment in nationalised industries.

Mr. Ward: When my right hon. Friend listens to special pleading for various parts of the steel industry, will he bear in mind that any money made available can come only from profitable industries? If he takes more money from those industries, it will not be available for investment in the real world.

Mr. Jenkin: That is a factor about which my Treasury colleagues remind me regularly.

Dr. John Cunningham: Is the Secretary of State aware that although the Labour Administration were reluctant to have massive unemployment from steel closures—we make no apology for that—other European Governments have shown even more reluctance to go along the path that he recommends? As the Secretary of State has said that there is to be a review of both the public and private steel industries, will he reiterate his commitment not to take decisions on any short-term considerations about the steel market? Will the right hon. Gentleman assure us that there will be no further closures while that review is going on, such as those at Roundoake and Craigneuk? Will he also


ensure that the evidence being collected by the Iron and Steel Trades Confederation about cheating on quotas and prices will be fully examined?

Mr. Jenkin: Of course we are not taking decisions on purely short-term considerations. I have made that point many times.
With regard to individual plant closures, I made it clear to the House when I made my statement on 9 November that the current review of the British Steel Corporation's strategy cannot be allowed to hold up necessary cost-saving measures that do not involve the closure of any of the five integrated steelworks. The corporation needs to take urgent action to restore its commercial and financial position. Those are matters for the corporation's judgment and do not require authorisation by Ministers.
Cheating was in the forefront of our discussions at Elsinore. I received a ready response from the Commission when I demanded more effective measures to police the regime to prevent what the hon. Gentleman described as "cheating".

Regional Development Grants

Sir William van Straubenzee: asked the Secretary of State for Industry what progress has been made in clearing moneys payable to industry by the ending of the four-month deferment in the payment of regional development grants.

The Minister of State, Department of Industry (Mr. Norman Lamont): I am pleased to be able to report that all the deferred RDG payments have now been posted to applicants. That represents nearly 10,000 payments and £150 million paid within three weeks. That is 10 days earlier than the Department's target date of one month from the announcement; that is, by 9 December.

Sir William van Straubenzee: Will my hon. Friend accept warm congratulations from all those interested for the efficient repayment of moneys which are a welcome injection for hard-pressed British industry?

Mr. Lamont: I am grateful to my hon. Friend. I am sure that industry shares his appreciation.

Advance Factories

Mr. Lennox-Boyd: asked the Secretary of State for Industry what is the average cost per square foot of constructing small advance factory units.

The Under-Secretary of State for Industry (Mr. John MacGregor): I regret that I have information only for the English Industrial Estates Corporation, which builds factories and workshops for the Government in assisted areas of England. Its average cost per square foot for factories under 2,500 sq ft is £18·20, including cost of land and site preparation.

Mr. Lennox-Boyd: Will my hon. Friend confirm that commercial rents are charged for such premises to give a reasonable return and that that has had the beneficial effect of encouraging a great deal of private sector investment in that sphere?

Mr. MacGregor: I confirm that there is now considerable private sector investment in small factories in assisted areas. The new commercial guidelines have resulted in a substantial success for EIEC. It is more in

tune with the market needs of tenants, because premises are being taken up, and of investors, as shown by my hon. Friend's question.

Mr. Adley: Will my hon. Friend reconsider the position whereby assistance is available for new factories but not for companies wanting to move to existing premises?

Mr. MacGregor: I believe that my hon. Friend is thinking about tax allowances, which are the responsibility of my right hon. and learned Friend the Chancellor of the Exchequer.

New Businesses

Sir David Price: asked the Secretary of State for Industry how many new businesses have been created since May 1979; and how many new jobs have followed.

Mr. MacGregor: We have estimated from information in VAT records that approximately 240,000 new businesses were created in the United Kingdom in 1980 and 1981. Similar statistics are not available for earlier years. We do not have figures for the resultant new jobs, because this information is not collected.

Sir David Price: Interesting though those figures are, does my hon. Friend agree that in an age of continuous change it is to new rather than to old ventures that we should look for pace setting in the economy and thus for job creation?

Mr. MacGregor: Certainly in many cases new industries, often created by new businesses will be very important for the future of the economy and for achieving structural change, but I am sure that my hon. Friend will agree that there are many older firms taking advantage of new technologies and new products which make just as big a contribution to job creation and economic activity.

Mr. Geoffrey Robinson: Is not the probable reason why the Minister has no figures for the jobs created that, in the period in question, 1·5 million jobs have been lost in the manufacturing sector alone, which represents a reduction of 22 per cent.? Will he confirm that those figures are higher than those of any of our major competitors and are a complete condemnation of the Government's policies?

Mr. MacGregor: The reason why I do not have the figures is that the best way of assessing the number of new businesses created and, incidentally, of deaths of firms that we have been able to find is through the VAT system. Under the VAT system, information on jobs is not collected.

Mrs. Kellett-Bowman: Is my hon. Friend aware that three weeks ago the Commission of the European Communities put forward proposals to help those areas very badly hit by the decline in the textile trade, including proposals for the conversion of mills into new units? Would not these proposals provide precisely the sorts of new jobs to which my hon. Friend refers? Will he give them his utmost support?

Mr. MacGregor: I shall have to look at these proposals. However, my hon. Friend will know that conversions of mills are undertaken, not least by the English Industrial Estates Corporation, and that very often they create good new businesses because they provide just


the kind of small staff facilities that new businesses need, but one always has to consider whether there is an economic case for the conversion of some older mills which are not suitable for this purpose.

Mr. John Garrett: Will the hon. Gentleman acknowledge that official statistics for the period in question show that the birth rate of small businesses is roughly in balance with the death rate and that businesses tend to employ more at their death than at their birth?

Mr. MacGregor: We discussed these matters in the debate on Friday. We have been working through a period of world-wide economic recession. An interesting indication of the amount of activity and buoyancy in the small business sector is that in 1980 births and deaths were roughly in balance, but last year there were 15,000 more new businesses than deaths. That is one reason why we are putting such emphasis on helping and encouraging small businesses, including start-ups.

West Midlands

Mr. Winnick: asked the Secretary of State for Industry what steps he is taking to improve the industrial position in the West Midlands; and what increase in industrial activity he expects thereby.

Mr. Norman Lamont: Recent announcements of cuts in the national insurance surcharge, freezes on gas and electricity prices and increased local authority capital spending will provide further help to industry. In addition, as a consequence of our economic policies, lower inflation and interest rates are providing a better climate for industry. Between 1982 and 1983, total output in the economy is expected to increase by 1½ per cent.

Mr. Winnick: Facing the real situation, is the hon. Gentleman aware that, despite the reassuring noises made by Ministers, the industrial position in the West Midlands is as bleak as ever, with numerous plants closing? When is it likely that industrial activity in the West Midlands will be the same as it was when the Government took office?

Mr. Lamont: The Government's expectation is that GDP and output will grow this year. That is a view shared by outside forecasts. The consensus of outside forecasts is that GDP will grow by 2 per cent. in 1983 compared with 1982, and the national insurance surcharge reduction will give £1·5 billion aid to industry. Of course industry has had a difficult time. What the hon. Member has to tell the House is whether the Labour Party's plan for a 30 per cent. devaluation, higher public spending, higher inflation and higher interest rates will do other than add to unemployment. It is little wonder, therefore, that the Shadow Foreign Secretary disowned the Labour Party's plan.

Mr Stokes: Is my hon. Friend aware that industry in the West Midlands does not want handouts from the taxpayer, but expects parity of treatment with other regions, which it has not had in the past, and looks forward to further reductions in taxation and, we hope, in rates and all the other imposts which bear so heavily on the private manufacturing sector?

Mr. Lamont: I am sure that my hon. Friend speaks for many business men in the West Midlands, and that is why they support our changes in regional policy which have

reduced the area of the country covered by regional policy from 44 to 27 per cent. That has lessened the comparative disadvantage that the West Midlands suffered.

Mr. Park: Will the Minister reconsider his arm's length relationship with the further shrinkage of the machine tool industry in Coventry? I notice that the hon. Gentleman is frowning. He duck-shoved it when I wrote to him about it. In view of all the wonderful achievements of the Government, about which the Minister has told us, how does he explain the loss of 4,000 jobs in Coventry in the past month?

Mr. Lamont: As regards the machine tool industry, we shall consider any applications for help made under section 8 of the Industry Act. A number of firms in Coventry have been helped in this way. I repeat that firms in the hon. Gentleman's constituency will benefit from the cuts in national insurance and in the interest rate. That is what industry wants. It wants help on costs.

Mr. Hal Miller: In March 1979 the chairman of the West Midlands economic planning council pointed out all the consequences that would flow unless the region adapted to new and innovative industries. In view of that, will my hon. Friend not weary of making propaganda for all the assistance available from the Government for innovation and new technology? Will he also explain why the region has made only 10 per cent. of the applications from the whole country for assistance under the microprocessor application scheme, for example?

Mr. Lamont: My hon. Friend has made a good point. Although applications from his area for the microprocessor application scheme have been disappointing, on other schemes, such as the small firms engineering scheme, a great deal of the aid has gone to the West Midlands. I am sure that that will be the case with other schemes put forward by the Department.

Manufacturing Output

Mr. John Grant: asked the Secretary of State for Industry what has been the overall percentage reduction in British manufacturing output since mid-1979; and what are the comparable figures for each of the other European Economic Community countries, the United States of America and Japan.

The Under-Secretary of State for Industry (Mr. John Butcher): In the third quarter of this year the index of production for manufacturing was 15 per cent. below its average level in 1979. A table containing comparable figures for other countries will be published in the Official Report.

Mr. Grant: Does not that answer in effect represent an utter condemnation of Government policy? Will the Minister confirm that the country is heading fast for its first peacetime trade deficit in manufactured goods for more than a century? Are not Ministers ashamed to be presiding over that state of affairs?

Mr. Butcher: The condemnation should go back more than the last three years. The hon. Gentleman will be aware, for example, that in 1976 his erstwhile colleagues in the Labour Party published a confidential report which extracted the trends for the 12 years up to that period and said that there could be 2·5 million people unemployed in 1980. The hon. Gentleman will know why that projection


was made. We have developed a mismatched economy over the past 20 years, producing goods for which there is low demand and not producing enough goods for which there is high demand. It will take a very long time to solve that problem, but I believe that, with a second term of office, this Administration will do it.

Mr. Chapman: If the reduction in our manufacturing output is worse than in the other countries mentioned in the original question, is not a significant reason for that the fact that our output per man is much more inefficient? How has output per man increased in, say, the last three years? If it has increased appreciably, does that not augur well for British industry when the recession ends?

Mr. Butcher: No doubt my hon. Friend will be aware of what has happened to the French and British economies since President Mitterrand took office. He will know, for example, that unit labour costs in France increased by 13 per cent. in the first year of the President's term of office, and that in the United Kingdom the comparative figure was 5½ per cent. I ask the House to consider the effect of those trends when mirrored under a Wilsonian Administration for a long time and their effect on our economy. My hon. Friend is right when he says that unit labour costs in this country have been a sad story for a long period.

Dr. John Cunningham: After listening to the Under-Secretary's answer one would think that the Government had only just taken office, not that they had been in office for three and a half years. As investment and orders, particularly export orders, are still going down, will the hon. Gentleman tell us when he expects to see a reversal of that disastrous industrial decline?

Mr. Butcher: The hon. Gentleman should not pretend that things that take place in macroeconomic policy have an immediate effect. I assume that he has never pretended that. The hon. Gentleman should also remember that the development of our mismatched economy has been two decades in the making, and he and his colleagues cannot disclaim all responsibility for those developments.

Following is the table:


Indices of Production for Manufacturing



Percentage change: latest three months on 1979


United Kingdom
-15


France
- 4


West Germany
- 5½


Italy
+ ½


Belgium
- 2½


Netherlands
+ 1


Luxembourg
-11


Denmark*
+ 2½


Ireland
+ 1½


Greece
- 5½


United States of America
-10


Japan
+11

* Index of volume of sales.

Source: CSO and OECD (Monthly Economic Indicators).

Industrial Growth

Mr. Adley: asked the Secretary of State for Industry which industries have shown the greatest growth in the last five years.

The Minister for Industry and Information Technology (Mr. Kenneth Baker): The high technology sectors, notably information technology, computing services, and aerospace, are prominent among the industries to have shown the greatest growth in the last five years.

Mr. Adley: I welcome the principle of assistance to industry and congratulate my hon. Friend, particularly on what he is doing on telecommunications. Is he satisfied, however, that we devote to modern growth industries a sufficient percentage of the national resources that we allocate to assistance to industry, compared with the huge sums that we have to pour into some of the older industries merely to maintain them in their present position?

Mr. Baker: Both my right hon. Friend the Secretary of State and I have said on several occasions that it would be sensible to shift the balance of support from the older to the newer industries. I am glad to say that under this Government the amount of money that is available for research and development and grants available to companies in the private sector in these new industries has grown from about £50 million a year to about £200 million this year.

Mr. Foster: What has the Minister to say to people in the Northern region, where we have less than our fair share of the fast-growing industries to which he refers? Has he seen the report in today's Financial Times, in which the Northern region director of the CBI says that that region has the lowest number of small business start-ups in Europe?

Mr. Baker: I am as anxious as the hon. Gentleman is to ensure that all regions, particularly the North, the North-West and the North-East, have more high technology companies. I try to promote our schemes in those areas, because I appreciate that many of the new jobs in our economy will come from the new companies and the new industries.

Sir David Price: Does my hon. Friend agree that the industries for which he and his Department are responsible have a far higher utilisation of capital in relation to output? Does he not therefore also agree that the old industries, in so far as they wish to and must bring in new technology, should get the same utilisation of capital? What is happening in Fleet Street shows the bad example that is being set by the media.

Mr. Baker: I do not want to give the impression that this new technology is just for new technology companies. It is essential that traditional and older industries in the Midlands and the North should also use it, or they wall not be in business within the next five years. Many of these newer industries are labour-intensive. The service industries in technology tend to employ infinitely more people in relation to the capital employed than do manufacturing industries.

Mr. John Grant: Is not the real answer to the question the lawyers and liquidators?

Mr. Baker: No. If that is the SDP's net contribution to industrial policy, that party will have an even worse result at the next election than we expect. It is typical. Too many people are selling this country short in achievement and in the potential of the new technologies. My job and that of my colleagues is to ensure that we capitalise and build on that success.

Mr. Robert Atkins: Does my hon. Friend agree, in mentioning aerospace as a growth industry, that there is an urgent requirement, sooner rather than later, for the Government to support the building of the A320 airbus, to safeguard the jobs and future of this high-technology aeroplane?

Mr. Baker: I am well aware of the importance of this project, and I assure my hon. Friend that we are considering it.

Industrial Competitiveness

Mr. Ioan Evans: asked the Secretary of State for Industry to what extent the competitiveness of British industry has changed since May 1979.

Mr. Patrick Jenkin: According to IMF figures, United Kingdom manufacturing industry's unit labour costs were 23 per cent. higher relative to our competitors in the second quarter of this year compared with the second quarter of 1979. However, this figure is misleading, because it conceals the important fact that there has been a 15 per cent. improvement in competitiveness in the last two years. This progress must be sustained.

Mr. Evans: Is it not true that we are more than 30 per cent. less competitive than when the Government were elected? As this issue has been the main thrust of Government policy, does it not show that Government policy has been an abject failure?

Mr. Jenkin: The hon. Gentleman will remember that it was the pay explosion in 1978–79 that wrought havoc with industry's competitiveness and that it took time to get that under control. Since 1980, rising productivity and much lower inflation have begun to restore our competitiveness. We must not throw it away by profligate public spending and soaring inflation, which would be the result of his party's policies.

Mr. Kenneth Carlisle: Is my right hon. Friend aware that many firms in engineering have increased their ability to compete by getting rid of restrictive practices and accepting realistic wage settlements? Is he further aware that that will result in better sales when the world recession is over?

Mr. Jenkin: My hon. Friend is quite right. During the past two or three years that industry has shown how much can be done to improve productivity by getting rid of outdated restrictive practices, introducing new methods, getting rid of overmanning and bringing in new products which are better designed and more up-to-date. That is what we should encourage. We have shown that we can do it. Let us not throw it all away now.

Mr. Orme: As the exchange rate plays such a large part in the competitiveness of British industry, will the Government now come clean on their policy for the exchange rate? We have heard contradictory statements from the Prime Minister and the Chancellor of the Exchequer. The Government have created panic in this area. Will they now make a statement?

Mr. Jenkin: It is nothing like the panic that would be created if the right hon. Gentleman's policy ever came into being. This is a serious matter. If a small misunderstanding by markets during the past few weeks has led to the fall in the pound that it has, what would happen if Labour

policy were ever put into practice? I repeat the Government's position, so as to make it absolutely clear. There is no exchange rate target. It should be beyond doubt in the markets that the Government have no ambition to depreciate sterling, whether by 3 per cent., 7 per cent. or 10 per cent., and certainly not by the Labour Party's 30 per cent.

Dr. Mawhinney: Does my right hon. Friend agree that one of the elements in competitiveness is an adequate supply of skilled manpower? Is he satisfied that when the recession ends this country will have a sufficient supply of skilled manpower to meet competitive targets?

Mr. Jenkin: I must tell my hon. Friend that I am not so satisfied. In my opinion there is a real danger of shortages of skilled manpower, particularly in the newer expanding industries. That is why my right hon. Friend the Secretary of State for Employment, with the Manpower Services Commission, has embarked on a major programme to increase people's skills and training. I believe that my Department has a role to play. We must become more of a people-oriented Department, and perhaps spend less on things.

Mr. Straw: Has the Secretary of State seen the survey of business men in The Times today, in which they seek to get the exchange rate down to $1·50, which would amount to a 15 per cent. devaluation in the dollar rate during this year—exactly what the Labour Party has called for? If the Government do not have an exchange rate target, why have they intervened in the market to force up interest rates and industry's costs, so as to maintain the pound at a higher rate than is necessary?

Mr. Jenkin: The hon. Gentleman should read The Times more carefully. The actual results showed that while 17 per cent. wanted sterling to be devalued to $1·50, 63 per cent. agreed with the Government's policy of allowing the pound to find its own level.

Girobank

Mr. Allan Roberts: asked the Secretary of State for Industry if he will bring forward proposals for further developing the National Girobank.

Mr. Butcher: As the National Girobank is part of the Post Office, the responsibility for its further development rests with the Post Office board. Such development is, of course, also dependent on Girobank's ability to compete effectively in the environment in which it operates. The House will no doubt have noted that the Select Committee on Industry and Trade said in its recent report on the Post Office:
We are pleased to learn of the continued expansion in the activities of the National Girobank".

Mr. Roberts: Will the Minister use his influence with the Post Office board to ensure that future development in regional policy does not take jobs away from Merseyside? Will he take action to set up Girobank as a truly national bank by amalgamating it with the National Savings Bank? Will the hon. Gentleman intervene with the Post Office board to stop the practice of giving free banking to high balance customers, while making excessive charges to low balance customers?

Mr. Butcher: The hon. Gentleman's last two questions are, of course, matters for the Post Office board. I am


informed that the National Girobank has given assurances to employees on Merseyside that there will be no compulsory redundancies arising from its move, as a result of a recent report, towards greater efficiency. The move towards regionalisation has benefited Merseyside, where a regional office has been set up.

Mr. Eggar: Will my hon. Friend confirm that there will be no form of subsidy from the Government to the National Girobank? Will my hon. Friend also confirm that when setting the external financing limit for the Post Office, no account will be taken of any possible losses that the National Girobank may make?

Mr. Butcher: I give my hon. Friend an assurance on his first point and an assertion that we shall pursue his second point. The National Girobank, as a bank, must compete with other banks on its merits in providing services to its customers.

Cable Television

Mr. Aitken: asked the Secretary of State for Industry what representations he has received following the publication of the Hunt report on cable television.

Mr. Warren: asked the Secretary of State for Industry if he will make a statement on the progress of the development of cable networks in the United Kingdom.

Mr. Kenneth Baker: I have received representations from many interested parties since the Hunt report was published, and my right hon. Friend the Secretary of State for the Home Department, who is responsible for broadcasting policy, has also received comments.
As I told the House on 20 April, the Government intend to announce the outlines of their policy towards wide band cable systems before the end of this year.

Mr. Aitken: Is my hon. Friend aware that the mood among potential investors in cable television is one of increasing caution, due to the figures and market research that are being produced concerning costs and consumer response? In order to overcome that caution, will my hon. Friend consider sugaring the investment pill by considering the possibility of extending the franchise beyond the 10 years recommended by Lord Hunt?

Mr. Baker: Whenever I have spoken about cable television I have always made it clear that I do not regard it as an area for the "quick-buck merchants". Those who are thinking of coming in to make a lot of money from cable television will be ill advised in seeking to do so. Investment in cable television must be for a long period of years.
My hon. Friend's point concerning the length of the franchise or the licence for the operator and the provider is important, and we are giving active consideration to it.

Mr. Warren: I welcome my hon. Friend's statement, but will he give an assurance that he will look at the legislation governing the rights of cable users and operators to lay cables? Will he ensure that the rights are there and that those concerned can use the rights of British Telecom and public utilities which already exist, to lay cables expeditiously?

Mr. Baker: Yes, I can give my hon. Friend that assurance. It is a very important matter, because it could involve a great deal of digging up of streets and

establishing telecommunications cable systems across the country. I assure my hon. Friend that our plans in that area are well advanced.

Mr. Frank Allaun: Does the Minister agree that with four channels already functioning there is enough television and that many people will not want to spend £20 a month for a bit of cable television?

Mr. Baker: When it was decided to introduce independent television, the same argument was adduced—that there was one channel already and that it was adequate. I remind the hon. Gentleman that much more than entertainment will be offered on broad band cable systems. It will be an electronic grid capable of taking a wide variety of services—educational services, remote education, services involving the local community, and services for the ethnic minorities——

Mr. William Hamilton: Come off it.

Mr. Baker: It will be a great opportunity for the people of Britain, and I am surprised that the Labour Party—if the hon. Member for Salford. East (Mr. Allaun) speaks for it—is so negative and so unappreciative of the opportunities.

Mr. Forman: Is it not unfortunate that comparatively little attention has so far been devoted to the interactive services and to that side of the technology? Will my hon. Friend ensure that his Department gives all necessary support to the technologies of the future, such as fibre optics and lasers, which are relevant here?

Mr. Baker: I assure my hon. Friend that in our proposals for cable television we shall give every opportunity to the new technologies. I shall have something to say about it when I reply to the debate on Thursday.

Mr. Golding: Will the Minister tell us now what he intends to say on Thursday? Is it not important that the House should be informed, before the debate takes place, of the Government's intentions for the long-term cabling of Britain?

Mr. Baker: I think that that would be a discourtesy to the House. It is important that on Thursday the House should be given an opportunity to express its views on some of the technological matters. I hope then to give a clear indication. I do not think that there is much dispute between us. I am sure that all hon. Members will welcome the opportunity to express their views on the broader issues of bias and the absence of political bias in broadcasting, and on the issues of pornography, public broadcasting and so on.

Industry Education Unit

Mr. Colvin: asked the Secretary of State for Industry how many schools were visited by his Department's industry education unit during the last 12 months.

Mr. Patrick Jenkin: About 15. School visits are not the most effective way of using the time of this small but very important unit in my Department.

Mr. Colvin: Does my right hon. Friend agree that Britain has been somewhat backward in business and industrial education? Does he agree also that it would not


be unrealistic to imagine that if the gap were filled—his remarks seem to imply that the Government are doing that—youngsters might be persuaded to set up in business on their own rather than wait for someone to employ them?

Mr. Jenkin: I am sure that my hon. Friend will applaud what the small unit in my Department is doing. It is supporting the Schools Council's industry project, which is precisely designed the help schools to set up their own companies. It supports the "Young Engineer of Britain" project. Youngsters are producing some staggering inventions. Recently we have made and are now circulating the film made by Anthony Jay, one of the authors of "Yes Minister", to demonstrate the value of youngsters setting up in business on their own. Already 2,000 secondary schools have requested and received copies of the film, which stars John Cleese. That is very good progress.

Mr. Christopher Price: I welcome the very good work of the unit and the fact that the Department is putting useful equipment into schools, but will the Secretary of State co-ordinate a little more with the local education authorities and the Department of Education and Science? There is a danger of putting equipment into schools when the schools are not able to meet the costs involved in making proper use of it.

Mr. Jenkin: I understand the hon. Gentleman's point, but there is already close co-ordination on these matters with the Department of Education and Science. Obviously, there is no point in providing schools with equipment if the teachers are not trained in how to use it and teach with it. The Department is running its own programmes of in-service training so that those who are involved, particularly with the micros in schools programme, have the means with which to teach the subject properly.

Mr. Greenway: Does my right hon. Friend agree that most school courses concerned with this subject start in the fourth year and continue in the years above this? Would my right hon. Friend like to see technical courses of this kind starting much earlier, say in the first year of secondary education, and continuing into the second, third and fourth years?

Mr. Jenkin: With regard to micros, there is everything to be said for primary school children having such courses. There is a remarkable picture in The Times this morning of children of six and seven. Recently at a secondary school I said to the head boy "You know all about this", and he said "Oh no, I am far too old".

Mr. John Garrett: How can Labour Members help the Minister in his continuing struggle with the Department of Education and Science—a matter that is becoming increasingly public? Everybody knows that the micros in schools programme is being undermined by that Department's refusal to provide extra funds to enable schools to buy software. We all know that the strategy for information technology in Britain is being undermined by massive cuts in universities and in higher and further education. How can we help the Minister defeat the Department of Education and Science in this crucial battle?

Mr. Jenkin: The hon. Gentleman is being wildly unfair to my right hon. Friend the Secretary of State for Education and Science. My right hon. Friend is showing

the maximum co-operation with the programme, which he launched when he was Secretary of State for Industry. It is absurd to imagine that a distinguished Cabinet Minister would, in his new Department, work against what he started in his old Department.
The hon. Gentleman knows—if he does not, he should—that under the recent allocations by the University Grants Committee there is a 2 per cent. increase in places for engineering students and, indeed, extra money for what my right hon. Friend refers to as "new blood".

Oral Answers to Questions — ATTORNEY-GENERAL

Mr. David Somes

Mr. Palmer: asked the Attorney-General what representations he has received from the Law Officers of the Government of South Africa about David Somes, a British national and a former South African police officer wanted in connection with the murder of four black South Africans.

The Solicitor-General (Sir Ian Percival): Somes was arrested on Saturday and charged with the murder of a black South African national. He was brought before a magistrate at Bow Street on Saturday and remanded in custody. The case is now sub-judice.

Mr. Palmer: Is the hon. and learned Gentleman aware that that answer will give general satisfaction, in the knowledge that justice will now be done?

The Solicitor-General: Yes, Sir.

Shoplifting

Mr. Campbell-Savours: asked the Attorney-General how many cases of shoplifting over the last six months have been referred to the Director of Public Prosecutions.

The Solicitor-General: The Director compiles his records on an annual basis and therefore the figures for the last six months are not available. However, since 1 January 1982, the nearest identifiable date, 26 allegations of shoplifting have been referred to him.

Mr. Campbell-Savours: Is it not true that there are many reported cases of persons being charged but not convicted of shoplifting who, under stress, commit suicide? Will the hon. and learned Gentleman review the national policy for prosecutions, particularly in the light of demands that psychiatrists be allowed to intervene before prosecution decisions are taken?

The Solicitor-General: Every time a person commits suicide under stress of prosecution of any kind it is a serious and unhappy event. The hon. Gentleman is not right to say that there is a high number of suicides in cases of pending prosecutions for shoplifting. Nor is it right for him to suggest to the House that psychiatric evidence is denied to anybody. In many cases a person does not want the factors to which the hon. Gentleman is referring to come out until the trial or after it.

Mr. Adley: My hon. and learned Friend must know that there has been an increase in such tragic suicides. Does he not accept, as the Home Office does, that the trading methods of self-service stores are largely responsible for the massive increase in shoplifting in the past few years?

Sir William Clark: Do not be silly.

Mr. Adley: My hon. Friend the Member for Croydon, South (Sir W. Clark) says "Do not be silly", but I am afraid that what I said is true. When will British law recognise that shoplifting in the modern world is a separate and different crime from ordinary theft?

The Solicitor-General: I know of my hon. Friend's great interest and concern in this matter, and he knows of mine. It is idle for anybody to suggest that there is a simple substitute for the present system that will solve all the problems. Shoplifting is just another form of theft. It is essential in any prosecution for shoplifting that all the ingredients of theft are established. The most useful course that we can take is to ensure that that is understood in all cases. That will prevent many people pleading guilty when they are not, as is said to happen.

Mr. Greville Janner: Does the hon. and learned Gentleman not understand that shoplifting is not the same as any other case of theft, because so many innocent people are charged with it? Does he not recognise the vast danger, particularly at Christmas, of honest but careless people being charged with shoplifting, and of ill and elderly people being so charged when their right place is in hospital, not in the dock?

The Solicitor-General: The hon. and learned Gentleman must surely realise after this time that I understand all those factors. I said that the ingredients are the same. One of the complaints that is made is that many people who are not guilty plead guilty, thinking that shoplifting is different from theft and that being found in possession of the goods is enough. I cannot make it sufficiently clear that that is not so.
However, there are a thousand and one different cases for the authorities to cope with. In some cases, ill-health would present a good defence and would even result in there being no prosecution if it were brought to the attention of those concerned in time. The hon. and learned Gentleman shakes his head. A case was referred to the Director of Public Prosecutions, but because the defendant was suffering from ill health proceedings were not taken. We are trying to deal with a thousand and one different cases, and it is idle to suppose that any one system will cope with all of them.

Mr. Neubert: Is it not time that my right hon. and learned Friend the Attorney-General introduced a better balance in the law to impose greater responsibility on shops and stores, because the merchandising methods of many of them positively invite shoplifting and contribute to their heavy losses, which are then passed on in higher prices to the honest shopper?

The Solicitor-General: My hon. Friend will recall that I have previously referred to a study group that was set up by the Ministers responsible for these matters. Yes, those matters need looking into by those who are responsible. We should implement any practical suggestions that might avoid the difficulties to which my hon. Friend referred.

Mr. Anderson: Does not public disquiet partly arise from the fact that the decision to prosecute rests with a multiplicity of bodies who may rely on differing criteria? Does the Solicitor-General think that guidelines should be issued to ensure uniformity of prosecution? When will the Home Office working party report, and will that report be made public?

The Solicitor-General: There have been questions about guidelines before, and my answer must remain the same. I do not think that any set of guidelines would solve the problems. Nobody has yet put forward a convincing answer to those problems. I cannot give a date when the working party will report, but I shall ensure that the hon. Gentlemen's question is referred to those responsible.

Mr. Campbell-Savours: On a point of order, Mr. Speaker. In view of the wholly unsatisfactory nature of those replies, both to Labour and Conservative Members, I beg to give notice that I shall seek to raise the matter on the Adjournment as soon as possible.

Births, Marriages and Deaths (Records)

Mr. Newens: asked the Attorney-General if he will make a statement on the progress so far made by the study group set up by the Lord Chancellor, as announced on 8 December 1980, to investigate, inter alia, the possibility of making microfilms of 100-year-old records of births, marriages and deaths, at present held by the General Register Office, available for general research by members of the public.

The Solicitor-General: The study group proposed to transfer all Public Records Office facilities to Kew, including those records. As the hon. Gentleman will know from his interest in these matters, on 30 April I informed the House that while the full scheme is in abeyance separate consideration would be given to the future of the General Register Office records. The Public Records Office is exploring ways of providing the additional microfilm readers and storage space needed to meet the expected demand.

Mr. Newens: Has the microfilming of the 100-year-old records been completed? If it has, surely it is a waste that these should not be made available to researchers at the earliest possible moment. Can the hon. and learned Gentleman give us any idea of the time scale before researchers can have access to those most valuable records? Will they be at Kew or in London?

The Solicitor-General: If the filming is not complete, it is nearly complete. The main difficulty is the provision of accommodation. It is thought that it would he for the convenience of those concerned if the documents or films were made available either in central London or at Kew. Accommodation that would meet the requirements has not yet been found in central London, and, as the hon. Gentleman knows, it is not available at Kew. Therefore, the answer to the last part of the hon. Gentleman's question is that the records will be made available as soon as solutions have been found to those practical problems. I assure the hon. Gentleman that those concerned are not dragging their feet in trying to find an answer.

Mr. Cormack: Will my hon. and learned Friend try to give us a slightly more precise idea of the time scale involved?

The Solicitor-General: No, I cannot, as it would be misleading to do so. However, I have not tried to fob off the hon. Member for Harlow (Mr. Newens). I know of the concern shared by the hon. Gentleman and by my hon. Friend. However, there are practical difficulties. We must find somewhere that is convenient to those who want to use the new service, that is within the right price range, and so on. That place simply has not yet been found.

Fast Reactor Programme

Mr. Robert Maclennan: On a point of order Mr. Speaker. After the Business Statement on Thursday I put a specific question to the Leader of the House——

Mr. Speaker: Order. The hon. Gentleman gave me notice, indirectly, that he intended to raise a point of order. However, we usually take points of order after statements. I hope that the hon. Gentleman does not mind.

Mr. Maclennan: Further to that point of order, Mr. Speaker. I understand that that is the usual practice, but I wonder whether it would be possible, on this occasion, for you to hear the point of order before the statement is made, because a written question is due to be answered at 3.30 pm. If the point of order is postponed, it may be too late.

Mr. Speaker: The hon. Gentleman may proceed.

Mr. Maclennan: After the Business Satement on Thursday I asked the Leader of the House whether the Government had reached a decision on the future of the fast reactor programme. I also asked the right hon. Gentleman for an undertaking that an oral statement would be made in the House so that questions could be put to the Minister responsible. The right hon. Gentleman gave a positive assurance and said:
That statement will be a most important decision that will merit a statement in the House."—[Official Report, 25 November 1982; Vol. 32, c. 1017.]
The following day a question for written answer was tabled by the hon. Member for Edinburgh, South (Mr. Ancram), the chairman of the Scottish Conservative Party. He asked whether the Secretary of State for Energy would make a statement about the fast reactor policy. Given that that question might be answered this afternoon, I wonder Mr. Speaker, whether you have any intimation that the Minister responsible would seek to make an oral statement.

Mr. Speaker: I have not received such notification.

The Lord President of the Council and Leader of the House of Commons (Mr. John Biffen): The House may feel it appropriate for me to comment on the point fairly raised by the hon. Member for Caithness and Sutherland (Mr. Maclennan). I am certain he will realise that he requested not an oral statement, but a statement. I apologise to the hon. Gentleman, because when I gave that answer I was not aware that a written answer would be given today. However, I do not feel it appropriate for the written question to be withrawn, as I thought that the House would wish to be in possession of information on the Government's policies. As today is the first day for tabling questions to the Department of Energy for oral answer, I suggest that it might be productive for hon. Members to go to the Library, to ascertain Government policy and to ensure that it is properly monitored when the Secretary of Stae is next available for Question Time.

GATT (Ministerial Meeting)

The Minister for Trade (Mr. Peter Rees): With permission, Mr. Speaker, I shall make a statement about the ministerial meeting of the General Agreement on Tariffs and Trade at Geneva, which concluded its proceedings at 5 am today. A copy of the declaration and decisions of the meeting will be placed in the Library as soon as possible.
The ministerial meeting was the first for nine years and was attended by more than 80 signatories which account for more than 90 per cent. of world trade. The purpose of the meeting was not to revise or amend the general agreement but to reaffirm support for existing obligations and to seek agreement on the examination of certain important issues that might form the basis of future negotiations.
After five and a half days and nights of negotiation—[HON. MEMBERS: "Ah!"]—the meeting adopted by consensus a document which constitutes a realistic commitment by the signatories to maintain the existing obligations of the GATT that have underpinned the open trading system since the war and to strengthen their observance in the future. The document does not prevent contracting parties from adopting safeguard measures, under the GATT, or measures with a similar effect.
In particular, the document provides for: a study to cover ways and means of achieving the acceptance by newly industrialised countries of increased obligations under the GATT and of an increase of trade with them; a study of the problems of international trade in services; a study covering agricultural trade issues in their entirety; a study of how best to combat trade in counterfeit goods and an improved procedure for the settlement of disputes.
Throughout the meeting the countries of the European Community consistently emphasised the need for conclusions and decisions to be expressed in realistic terms. For that reason, the European Community entered a reserve on a proposal to link the study of agricultural trade with a wide commitment to renegotiate the fundamental structure of that trade. The European Community, in common with a number of other signatories, made certain other interpretative declarations.
Even with those reservations, the outcome of the negotiations—undertaken against the background of a world recession—must be regarded as an encouraging recommitment to the maintenance of the open trading system, on which the prosperity of the United Kingdom as a great exporting nation depends, and has helped to focus the attention of the world on the consequence of a breakdown of this system. It was, I think, recognised that the United Kingdom, through the European Community, made a full and constructive contribution to this outcome without, however, compromising its right to safeguard its essential national interests.

Mr. K. J. Woolmer: The Minister will know that the Opposition had not minutes, but seconds, in which to consider the statement before he rose to address the House. Nevertheless, we are grateful to him for letting us see the statement.
On 19 November the Minister said that agriculture was not a crucial issue for Britain, and added:
We are not uncritical supporters of the CAP".


Has the Minister supported the interests of British consumers, taxpayers and industrial workers in the attitude that he has adopted in the negotiations towards agricultural trade and the CAP? What steps are to be taken to control unfair competition from newly industrialised countries such as Brazil and Korea and to reduce the trade barriers that they erect against our exports? What progress has been made on improving and speeding up GATT disputes procedures and on ensuring that other countries, as well as Britain, abide by the rules of the game?
In particular, what pressure is to be put on Japan to open its markets, just as we frequently open our market to Japanese goods? The Opposition welcome any move to open up international trade in services, but does the hon. and learned Gentleman recognise that manufacturing industry in Britain is bearing the full brunt of the Government's deflationary economic policy, of unfair competition and of dumping from abroad? Does he recognise that a growth in banking and insurance services is no substitute for the decimated manufacturing industries, such as steel, vehicle production and textiles?
Does the hon. and learned Gentleman recognise that the Opposition share the anxiety that the world should not drift into "beggar your neighbour" policies of trade restriction and cumulative unemployment? Does he also accept that such protectionism stems from the problems of unemployment and excess capacity, whose basic causes lie in the economic policies of cutback and despair that are promoted by his Government?
Finally, what steps are being taken by the world's political leaders to co-operate to expand demand, production and employment, so reducing the very fear that is leading to a threat of protectionism? What is to be done about increasing the borrowing capacity of the developing nations which still provide vital markets for our industries? What does the Minister wish to see done about the generalised chaos of the foreign exchange markets, which leaves British and American exchange rates so badly out of line that it is precious little wonder that the unemployed suffer from the threat and fear of protectionism?

Mr. Rees: I recognise that trade issues cannot be divorced from economic and monetary issues. It was not, however, within the remit of the GATT to conduct quite such a wide-ranging review, although there were perceptive contributions by the representatives of the International Monetary Fund and the World Bank.
As the House will recognise, the common agriculture policy is a particularly sensitive European Community issue, and I emphasise that in practically every country agriculture is treated as a special case. It was for that reason that it was thought wise in the first instance to conduct a far-ranging review.
I have emphasised that it is important that the newly industrialised countries should recognise their obligations as well as their rights, not only to the developed countries, of which the United Kingdom is one, but to the less developed countries, which are desperately anxious to have access to their markets.
We would like to see a rather sharper procedure for the settlement of disputes. I hope that that will result from the meeting.
Of course Britain has difficulties with various countries. The hon. Member for Batley and Morley (Mr. Woolmer) mentioned Japan, but he will recognise that in an international forum of this type, which was concerned

with the establishment of general principles by which the conduct of individual countries could be judged, it would not have been appropriate for me to enter into a series of bilateral meetings to discuss these individual problems, although we are conscious of them. I assure the House that we shall follow them in other forums.
I should certainly not assert that trade in services should assume a primacy over our concern with trade in manufactured goods. However, I remind the House that three out of every five employed people in this country are employed in service industries, not only in banking and insurance, but in consultancy services, shipping and so on. It is important for Britain's well-being that we should try to liberalise trade in services as well as in manufacturing.

Mr. J. Enoch Powell: Does not this ill-disguised fiasco make it clear that the Government's justified attachment to an open trading system is fundamentally incompatible with membership of the European Economic Community, to which they are also, unfortunately, disposed to cling?

Mr. Rees: I leave the House and the outside world to judge whether the word "fiasco" would be appropriate in this context. It would be better to judge by the consequences that flow from the decisions taken on this occasion than to anticipate them. I find no inconsistency whatever between Britain's adherence to the European Community, which, as I have said, demonstrated that it is an outward looking organisation which plays a substantial role in underpinning the open trading system.

Sir Julian Ridsdale: Is my hon. and learned Friend aware of how many hon. Members appreciate the Government's determination, in spite of the difficulties, to continue their policy of an open trading system? With regard to Japan, will my hon. and learned Friend continue the industry-to-industry talks which have been taking place, as it is on this basis particularly that help can be given to remedy the present large imbalance in trade?

Mr. Rees: I am grateful to my hon. Friend for his views. The Government recognise the importance of the industry-to-industry consultations, and nothing that took place in Geneva would prevent such agreements being concluded.

Mr. John Horam: Is the Minister aware that a limited and unsatisfactory agreement such as this is certainly better than no agreement at all? First, is the Minister confident that the EEC is still seeking to expand world trade as much as it should be during this phase of world recession? Secondly, will the hon. and learned Gentleman expand on the studies in international services which have been agreed by the signatories? In particular, what factors do they cover, and is Japan to be included, because the Japanese market is extremely difficult for British companies wishing to sell services? As the Minister said, three out of five people are now involved in services and it is an extremely important sector in this country.

Mr. Rees: I assure the hon. Gentleman that the European Community, as a community, is concerned with the expansion of world trade.
With regard to the study of services, the first need will be to identify obstacles in each particular country and then to meet again to consider what steps can be taken to deal with them. Certain of the less developed countries entered


reservations on that matter. Japan, however, entered no such reservation, and therefore any obstacles that are found to the trade in services of that country would certainly be within the purview of the examination.

Mr. Barry Jones: If the conference was not a fiasco, will the hon. and learned Gentleman categorically state that the future for steel workers and textile workers, whose jobs have been destroyed by cheating imports, is now more assured?

Mr. Rees: I cannot assure the House that their future will be more assured, but I can say that nothing that emerged from this conference will prejudice their future. Indeed, they ultimately will have an interest in a system of free but fair trade.

Mr. Michael Grylls: I congratulate my hon. and learned Friend on his stamina at a marathon conference. Does he agree that the important thing is to maintain not only free trade but fair trade, and that the House will expect, within GATT, to undo these non-tariff barriers that are making it so difficult for British firms to export to countries such as Japan and Korea?

Mr. Rees: I am grateful to my hon. Friend for his kind opening remarks. Perhaps one develops a certain stamina in Committees on controversial Bills which stands one in good stead at these meetings. I hope that it will emerge from the declaration of the meeting that the identification and removal of unfair tariff barriers should play a major part in the GATT system.

Mr. Douglas Jay: Since it is wholly in the British national interest to give full support to the United States' opposition to EEC export subsidies which are a breach of GATT principles, why did the Government not do so?

Mr. Rees: The United States must speak for and explain its own position. Although the United States' representative was careful to express his country's views in moderate terms, by contrast with some of his legislators who turned up at Geneva, there is no sign that a trade war in this area will break out. I should deprecate it, and I should hope very much that the United States' Administration would also do so. It would not be to the advantage of the world as a whole if a conflict on the issue of subsidies were to break out and any country, particularly one in a dominant position, were to flood the agricultural markets with subsidised exports. The casualties would be the smaller countries, and particularly our friends in New Zealand.

Mr. Russell Johnston: As the Minister has a reputation for clarity, does he agree that this is a somewhat dense statement, even for five o'clock in the morning? Does he believe that it will result in a decrease in protectionism? Will he be so kind as to explain what he meant by saying that the European Community made certain other interpretative declarations?

Mr. Rees: I leave the House to judge whether my statement was vital or moribund. It is not for me to say. I shall endeavour to provide the clarification that the hon. Gentleman requires. An interpretative reservation was entered on roll back. As I have said, a reservation

remained on agriculture. There were one or two matters of triviality which arose largely because of the haste in which it was necessary to draft the final declaration.

Mr. Anthony Nelson: I understand that last year, for the first time, Britain's earnings from invisible trade amounted to more than those from visible trade. Given that significant fact, will my hon. and learned Friend explain the main reasons for the partial failure of the section of the GATT talks dealing with service agreements and name the main culprits? An agreement in this area is vital for the industries concerned and for our future.

Mr. Rees: Both the European Community and the United States attach importance to progress in this sphere. I should not like to suggest that there are any culprits. However, a number of the less developed countries entered formal reservations.

Mr. Michael Meacher: What precise means have been established to ensure that the grossly unequal tariffs in many sectors between the United Kingdom and the so-called newly industrialised countries will be equalised within a reasonable period?

Mr. Rees: I cannot suggest that there was any guarantee, but the relationship between the developed world, the less developed world and the newly industrialised countries featured in our discussions and a programme of work is envisaged.

Mr. Nigel Forman: May I add my tribute to the work that my hon. and learned Friend did in Geneva? Will he tell the House a little more about the study that is to be launched into the settlement of disputes, which was clearly one of the most important topics to be discussed? Will he assure the House that UNCTAD will not have an important implementation role in a sphere which should properly belong to the GATT?

Mr. Rees: To be realistic, one must recognise that the initial process in the settlement of disputes should be one of conciliation and consensus. Emphasis was laid on that. It is regrettable that there have been occasions when countries have blocked the conclusion of the panel. I hope that the conclusions that have been reached will discourage countries from using that type of technique. I cannot predict the outcome of UNCTAD's consideration of the agenda. That is a separate matter. The GATT is possibly a better forum, because it concentrates exclusively on trade issues while UNCTAD has a wider remit.

Mr. Ron Leighton: Will the Minister accept that one of the major reasons for the failure of the conference is the EEC's rigid agriculture protectionism? Is it not true that Mr. Anthony of Australia left the conference early, having called the whole thing a fiasco, because of the EEC's attitude? Does he agree that the common agricultural policy fouls our relations with Australia and the United States and undermines the economies of the Third world?

Mr. Rees: In every country agriculture is treated as a special economic activity.

Sir Peter Mills: Quite right, too.

Mr. Rees: I even discovered that our Swiss friends support agricultural activity to a minor extent. I regret the statement of Australia's Deputy Prime Minister. For


reasons that I understand, he had to leave the conference early on Saturday morning. The text of his statement was circulated before the final declaration, and perhaps it did not reflect the conference's ultimate conclusion. It might have had a different tone—this is for him to say, not for me—had he remained to the end.

Mr. Robin Maxwell-Hyslop: Does my hon. and learned Friend agree that agricultural output depends on the weather, over which producers have no control? Surely it is better to have regulations so that surpluses do not ruin producers than to have shortages, in which event people starve.

Mr. Rees: My hon. Friend perceptively draws attention to the crucial distinction between manufacturing and agriculture, which naturally bears on different countries' approaches to the problem.

Mr. Doug Hoyle: Will the hon. and learned Gentleman accept that, whatever he says about service industries, Britain's prosperity and employment prospects depend upon a buoyant manufacturing industry? His statement, which was like one of Scrooge's, has brought little cheer to our manufacturing industry, especially to the automobile, steel, electronic and textile industries. Why did he not do more about unfair competition, and especially dumping? Such action has been further delayed by our membership of the EEC.

Mr. Rees: Nothing that took place at the GATT conference will prevent the most rigorous application of anti-dumping procedures. I should not like to assert as confidently as the hon. Gentleman that Britain's prosperity depends upon any one economic sector. Naturally it is the Government's desire that Britain should have a bouyant manufacturing sector. That depends on its being as competitive as possible.

Mr. Jonathan Aitken: My hon. and learned Friend will recall that the Gracious Speech included the premise that Britain would take action at the GATT to try to remedy the unfair trading practice that means that British-manufactured cars exported to Spain are subject to a tariff nine times greater than that which Spanish cars attract when they are imported into Britain. What happened on this issue at Geneva? What other unfair trading practices that discriminate against Britain were remedied?

Mr. Rees: I mentioned this problem—there are others between Britain and Spain—to the Spanish Minister for Trade, who is about to hand over his portfolio in a matter of weeks to a member of the incoming Spanish Government. As I have explained, it was not exactly the forum at which to pursue to a conclusion bilateral negotiations and problems, even such important problems as motor car tariffs.

Mr. Ian Mikardo: If we are to assess the results of the conference realistically and not through rose coloured glasses, was it not condemned to ineffectiveness and ridicule on the very first day when the Japanese Government's representative put his tongue firmly in his cheek and claimed that Japan was one of the most open markets in the world?

Mr. Rees: I assure the House that my spectacles were not rose coloured at any stage while I was at Geneva. I listened with great care to the Japanese Foreign Secretary's

statement. Each country has its own perception of the advantages and disadavantages for its own markets. We shall continue to press on the Japanese the necessity to open their markets still further to British exports.

Mrs. Elaine Kellett-Bowman: Will my hon. and learned Friend accept that I am much relieved that the consensus does not prevent the use of safeguard measures when vital national interests are involved? May I thank him for his robust efforts on behalf of the textile industry in trying to get a fair deal for newly industrialised countries and for our textiles?

Mr. Rees: I am grateful to my hon. Friend for her statement. I assure the House—especially hon. Members representing textile constituencies—that nothing in the declaration will prevent a firm MFA.

Mr. George Park: When I asked the hon. and learned Gentleman about tariff disparities on the import-export of vehicles on a previous occasion, I was told that he would deal with the issue at the GATT meeting. Following the debacle at Geneva, what does he propose to do?

Mr. Rees: I do not accept that there was a debacle at Geneva. I assure the hon. Gentleman that bilateral problems will be pursued as vigorously as they were before I went to Geneva.

Mr. John Townend: Does my hon. and learned Friend agree that we have been talking to the Japanese for years about opening up their market to British goods and services and that the results have been minimal? Is the time not approaching when we should tell the Japanese that they are to open their market quickly, or the talking will cease and retaliation will have to begin?

Mr. Rees: The Government have taken a robust attitude, as has the European Community, on trade with Japan and a complaint had been made under article 23 of the GATT long before the Geneva meeting.

Mr. Ioan Evans: In his discussions with the representatives of the Third world and the Commonwealth countries, did the Minister reiterate that it is this country's intention to reform fundamentally the common agricultural policy or to pull out of that part of the EEC, or did he put the point of view of the EEC?

Mr. Rees: The negotiation on behalf of the European Community was undertaken by the Commission. I assure the House that there was a considerable British input to the Community position before the Commission representatives went into the council chamber. Because the CAP is essentially a Community issue, although its effects go outside the Community, there could be no question of a renegotiation of the CAP at Geneva.

Mr. Tony Marlow: Do the Government wish to move to a freer and fairer trading system in agriculture products, as in other products? If that is so, is it permitted by that foreign institution in Brussels to have a national view on the subject?

Mr. Rees: I do not know how my hon. Friend defines "foreign". There is an institution, the headquarters of which are situated in Brussels, of which we are members. That gives it a British complexion, although it may also give it a French, German and Benelux complexion. The negotiation, renegotiation or transformation of the CAP is a question for the Community and did not arise at Geneva.

Mr. D. N. Campbell-Savours: How does the Minister expect the United States to react to Europe's inflexibility on the CAP? In the light of what he said, is he not disturbed by the prospect of American legislators returning to the United States and publicly propagating the view that Europe is now highly protectionist, particularly in agricultural activity?

Mr. Rees: Naturally, I should not like American legislators to go back to Capitol Hill and put about that view, because it is not true. However, they must speak for themselves. They were not part of the United States negotiating team at Geneva.

Mr. Hal Miller: I endorse my hon. and learned Friend's vigorous pursuit of our vital interest in keeping open the channels for exports of services, but will he say, without an interpretative note, whether anything took place at the GATT meeting that made it more difficult—or easier—to deal with the disparities in our tariffs with Spain on the vital trade in components and vehicles?

Mr. Rees: Nothing that occurred at Geneva will make it more difficult for us to deal with that problem.

Mr. Derek Foster: Does the Minister recognise that the virulent growth of protectionist forces is the inevitable result of the vicious cycle of contraction throughout the international world, caused by similar orthodox financial policies pursued by Governments such as the Minister's? Would not the Minister be better employed using his time to persuade the major countries of the OECD to begin to boost their economies?

Mr. Rees: It was not part of my responsibilities to raise that question or to pursue it with the other signatory countries at Geneva. We were primarily—indeed, essentially—dealing with the problems of trade, but, as I hope I made clear in an answer to an earlier question, one recognises that trade cannot be divorced from economic questions. However, I hope that nothing in my answer can be construed as acceptance in any way of the strictures by the hon. Gentleman on the Government's economic policy.

Several Hon. Members: rose—
—

Mr. Speaker: Order. I propose to call the three hon. Members who have been rising.

Mr. Richard Shepherd: Is it not curious that the Government have abandoned the belief in free trade in agricultural produce which was the basis of our attachment to free trade, originally and historically? Is my hon. and learned Friend not alarmed at the division that that is causing with our historic allies, the United States and our most important allies, the British Commonwealth nations?

Mr. Rees: The party to which my hon. Friend and I belong has moved on a little since the repeal of the corn laws.

Mr. Shepherd: To our benefit?

Mr. Rees: I emphasise that I kept closely in touch with both United States and Commonwealth representatives. I went to a special meeting of Commonwealth Ministers the afternoon before the conference opened.

Mr. Allen McKay: Is the Minister aware that my constituents will believe that what he said, particularly about the steel industry, fell peculiarly from his lips, bearing in mind that it has just been announced that at the steelworks in my constituency, Stocksbridge, and in the constituencies of my hon. Friends the Members for Rotherham (Mr. Crowther) and for Sheffield, Attercliffe (Mr. Duffy), 1,709 jobs are to be shed, after years of job shedding? When will the Government take effective, urgent and, if necessary, unilateral action to support our steel industry?

Mr. Rees: I know of the hon. Gentleman's anxiety, which is shared by many other hon. Members, but I emphasise that long before the meeting at Geneva, which was not the forum at which to raise such a precise issue, this country took a robust position at Brussels, particularly in respect of the United States' countervailing and anti-dumping duties.

Mr. Teddy Taylor: As a written answer last week showed that Common Market food prices, on average, were more than twice as much as world prices and sugar was three times as much, did not my hon. and learned Friend, as a supporter of open trade, feel justified in persuading his colleagues to make a tiny move towards the reduction of the absurd protectionism that involves tariffs of over 100 per cent. and export subsidies of £7 million a day, which are not only causing hardship here but are wrecking the economies of some of the poorest countries in the world?

Mr. Rees: Many countries and trading groups in the world subsidise their agriculture and agricultural exports. My hon. Friend is wrong to concentrate too much—although I know his view—on this problem of the European Community. As I emphasised, agriculture featured in our discussions, and there will be a study. I have no doubt that there will be some useful and constructive conclusions. Perhaps I am over-optimistic, but they may even satisfy and reassure my hon. Friend.

Mr. Woolmer: The Minister referred to entering a reserve on the proposal to study agricultural trade and to certain interpretative declarations. Will he throw more light on those cautious words? Will he recognise that the House regards his statement and the conference as, to say the least, extremely disappointing, and, at best, believes that he has won a breathing space against the forces of reducing trade rather than increasing it? What use will the Minister and the Government make of that breathing space to protect our industries from unfair dumping and to open up other markets to our exports, and what will the Government do on the world scene to make the world economy expand again?

Mr. Rees: The reserve was not on the proposition that there should be a study of agricultural problems but on an unrealistic commitment to a fundamental reform of the structure not only in the European Community but in the world, which we felt could not be observed and would therefore only discredit some of our conclusions. Of course I recognise that a breathing space has been achieved. Perhaps we cannot say that the principles of GATT have been carried forward far, but I have indicated one or two areas where they can be carried forward, which will be of definite benefit to the United Kingdom, its economy and its manufacturing and service industries.

BILL PRESENTED

CIVIL AVIATION (EUROCONTROL)

Mr. Peter Rees, supported by Mr. Secretary Pym, Mr. Secretary Nott, Mr. Secretary Younger, Mr. Secretary Edwards, Mr. Leon Brittan and Mr. Iain Sproat presented a Bill to make further provision with respect to the European Organisation for the Safety of Air Navigation known as Eurocontrol and to amend section 73(4) of the Civil Aviation Act 1982: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 17.]

Statutory Instruments, &c.

Mr. Speaker: By leave of the House, I shall put together the Questions on the motions relating to Statutory Instruments.

Ordered,
That the draft Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1982 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Veterinary Surgeons Act 1966 (Schedule 3 Amendment) Order 1982 be referred to a Standing Committee on Statutory Instruments &amp;c.
That the draft Welfare of Livestock (Prohibited Operations) Regulations 1982 be referred to a Standing Committee on Statutory Instruments, &amp;c.— [Mr. David Hunt.]

British Telecommunications

Mr. Stanley Orme: On a point of order, Mr. Speaker. I wish to raise a matter of great importance before we proceed to the Second Reading, of the Telecommunications Bill. There is a report in The Times this morning, headed
Pension fund threat to Telecom sell-off".
The article states that there is a £1,200 million shortfall dating back to 1969, when the Post Office was established as a corporation. Should we proceed with the Bill, which is about to have its Second Reading, when there is no mention in it of how that £1,200 million deficit will be funded? Will it be funded by the investors? Will it be funded by the Government? I have frequently raised the matter of pensions with the Secretary of State, who has said that there was no problem to worry about and that there was no issue. We are now told that there is a colossal deficit. The House is entitled to an explanation if we are to proceed with the Bill and if there is to be no reference to the circumstances in 1969. If we do not have an explanation, we should not proceed with the Second Reading of the Bill.

The Secretary of State for Industry (Mr. Patrick Jenkin): Further to that point of order, Mr. Speaker. I am astonished that the right hon. Gentleman, who knows something about these matters, should have allowed himself to be bamboozled by a journalist who simply did not know what he was writing about. The pre-1969 deficit was debated at length during the proceedings on the British Telecommunications Act 1981. British Telecom has a statutory obligation to make annual payments to liquidate the pre-1969 deficit, which arose because the employees were originally civil servants and the pension scheme was non-funded. The Bill expressly provides for the transfer of those obligations to the new company. Mr. Gareth David simply did not attempt to do his homework. He does not know what he is writing about. The right hon. Gentleman has fallen flat on his face.

Orders of the Day — Telecommunications Bill

Order for Second Reading read.

Mr. Doug Hoyle: Further to that point of order, Mr. Speaker. In view of the Secretary of State's unsatisfactory reply and his lack of concern for the employees and their pensions, is it not even more obvious that we should not proceed with the Bill today?

Mr. Ian Mikardo: Further to that point of order, Mr. Speaker. Irrespective of what the Secretary of State may think about journalists of The Times, I draw attention to the fifth report of the Industry and Trade Select Committee for the Session 1981–82 which was published seven months before The Times report. The Committee expressed considerable anxiety about pensions. That unanimous report said:
Following the separation of the Post Office from British Telecommunications, each Corporation has established its own pension fund … the … fund has an actuarial deficiency that is being amortised over the period to 1992 by a contribution equal to 3·5 per cent. of earnings. The Corporation has the responsibility for making good deficiencies in the pension fund, and this liability is not, in law, underwritten by the Government.
We note the uncertain nature of the Corporation's liability".
Is it not clear that, notwithstanding what the Minister said, there is an area of doubt—I put it no more strongly than that—that ought to be resolved?

Mr. Speaker: That is not a matter for me. It is clear that I cannot rule in that matter.

The Secretary of State for Industry (Mr. Patrick Jenkin): We are getting a taste of debates to come. I assure the hon. Member for Bethnal Green and Bow (Mr. Mikardo) that I shall deal with pensions during my speech.
I beg to move, That the Bill be now read a Second time.
The Bill will empower the Government to convert British Telecom from a nationalised corporation into a Companies Act company with shares like any other company. It will allow members of the general public to buy shares. That will start after the next general election. When half the shares have been sold, BT will no longer be a nationalised industry; it will become a private sector company.
I can understand that the Bill may be controversial in the House, but, as there are fewer than one dozen Labour Members present, one wonders how serious their opposition will be. It is clear that the Bill will be widely welcomed by millions of people. They know that competitive free enterprise is a far better system than State monopoly. The Bill also stands as a clear testimony to the Conservative Party's determination to roll back the frontiers of the State and to give people a real stake in the economy. That is what I call real public ownership.
The Bill follows logically the measures that we are already taking to bring competition into telecommunications. Before the Conservative Government came to power, apart from the city of Kingston upon Hull, BT was the sole supplier of telephone services and most telephone equipment. That monopoly was bad not only for customers, but for BT. Any growing business, such as BT, needs the discipline of the market place to meet the needs

of its customers effectively. It needs the right to raise its own finance, the freedom to invest and the freedom to manage the business.
The British Telecommunications Act 1981 was a first step towards greater competition. I have already licensed Mercury Communications Limited to compete with BT. It is the first such competitive network in Europe. Moreover, an ever-widening range of equipment is being opened up to competition. The market is increasingly free to sell what are called value added services over the BT and Mercury networks. We also hope to have competitive national radio telephone networks soon.
Full credit is due to Sir George Jefferson, the chairman of BT, to the board and to the staff of BT for the way in which they have begun to transfrom what was until recently a Government Department into a commercially oriented business. I hope that we shall hear from the Opposition whether they favour the opening up of telecommunications to competition and the widening of consumer choice or whether they prefer State monopoly. I hope that the right hon. Member for Salford, West (Mr. Orme) will come clean on that.
We prefer competition. So long as BT is nationalised, and therefore subject to the web of controls that stifle its commercial freedom, and can obtain capital for investment only from the customer through higher charges or from the taxpayer, it will face growing competition with its hands tied. I want BT to become a major force in the world telecommunications market, such as American Telephones and Telegraph. For that to happen, BT needs the financial freedom that a nationalised industry does not and can never have. As a nationalised industry, BT does not have direct access to financial markets. Its borrowing is controlled by the Government and it counts against the PSBR.
That was true under the Labour Government, so much so that they cut back the amount of investment year by year in real terms because they could not afford to fund it from the PSBR. Successive Governments have faced an awkward choice. If they want to hold prices down, investment needs are starved. Under the Labour Government, between 1975 and 1979, investment declined in real terms year by year because they recognised that they could not fund it out of the PSBR.
If, like the present Government, one attaches much higher importance to investment in growing industries, such as BT, higher customer charges are inevitable. The only alternative, which has been rejected by both main parties and by the Social Democrats when they were members of the Labour Party, would have been vastly greater borrowing from the national loans fund and consequent charge on the PSBR.
Under the present Government, BT's network is being modernised. New digital switching is being installed and optical fibres are now being used, but the customer has had to dig deeper and deeper into his pocket to pay for that modernisation. That does not have to be so. It is a self-imposed Hobson's Choice, dictated by the brute facts of nationalisation.
When, after the next election, the majority of shares in British Telecom are held by the public, BT will be able to look to the market for most of its external financing. That will give the management greater flexibility and put less pressure on customers and taxpayers. It will subject BT to proper market disciplines and allow it to respond to


the needs of customers as they change, just like the privately-owned telephone companies in the United States.

Mr. Nigel Forman: I support the broad arguments for this form of privatisation, but can my right hon. Friend assure us that one of the unintended consequences of the Bill will not be that marginal services will have to attract marginal prices to achieve a realistic level of pricing?

Mr. Jenkin: I shall come to that question. I know that it has caused some anxiety. There is no reason why BT, given the freedom, should not be able to respond to the market, just as privately owned telephone companies do in the United States. British Telecom, the unions, the Select Committee and the NEDC have all asked that BT should have access to the financial markets. The Bill opens the way.
Could BT get access to the capital markets without a change in ownership? That case may be made by the Opposition, and the Government looked carefully at what the press christened the Buzby bond—a performance-related bond, with returns to bond holders depending on the organisation's results.
Such a bond would not begin to meet BT's needs. The maximum sum that was ever envisaged to be raised by the Buzby bond was about £150 million in the first year. Set against a current investment programme running at nearly £1½ billion a year and growing, it can be seen that the bond would never have solved the problem. The only way is to free BT from Treasury control and allow it to raise capital on the market, as do other major businesses. That is what BT has welcomed. It is, therefore, hardly surprising that after I made my statement on 19 July British Telecom said:
The Board can say … that, given the right conditions, it would welcome freedom from what the Secretary of State has described as the web of Government control and interference.
Those who want to see more competition in telecommunications and to see BT become a major world force in information technology, competing in the rapidly-growing market for telecommunications, must accept that the Bill offers the only way forward. Wanting those things and voting against the Bill would be dotty.
Of course, we must discuss the details of the Bill, but let us do so in the recognition that, for the customer, competition is better than monopoly, that if BT is to be free to compete it must be free to raise capital, and that the only way in which that can be done is to convert BT into a private sector company. That is what the Bill does.

Mr. John Browne: My right hon. Friend knows that I fully support the Bill and much admire his general thrust, particularly with regard to British Telecom. He mentioned monopoly and competition as opposed to mere privatisation. Companies in the telephone business are having to get approval for their equipment and are being asked to pay between £20,000 and £30,000 to get each item approved. Approvals for four telephones will cost four times that amount. That is cash up front, with no guarantee that the items will be approved. Does my right hon. Friend believe that such guidelines are an encouragement to private enterprise and competition?

Mr. Jenkin: I am sure that my hon. Friend agrees that in the requirement of approvals—this happens under many pieces of legislation—it is right that the fees should cover the cost. I know that there have been difficulties as we

have moved out of an era when all approvals were given by BT into an era when approvals are given by independent bodies—initially by the Department and now by the British Approvals Board for Telecommunications. It has resulted in delays and difficulties, but my hon. Friend the Under-Secretary has devoted considerable attention to speeding up the process and I hope that we can make it more economical.
We have been accused by some of going breathtakingly fast in the process of liberalisation. It is sometimes difficult to be accused of going too slow.
The Bill is, perhaps, not as formidable as it looks. Of the 149 pages, 25 comprise schedule 2, which is a re-enactment and updating of the Telegraph Acts. Another 50 pages comprise schedule 4, embodying minor and consequential amendments. Clauses 66 to 75 amend the Wireless Telegraphy Acts to strengthen the enforcement provisions for dealing with radio interference and the illegal use of radio equipment.
The heart of the Bill is in the first 65 clauses and schedule 1. Rather than take the House through each clause, which would weary hon. Members unbelievably, I shall explain the Bill's main provisions. Parts I to III provide for the appointment of an independent Director General of Telecommunications and for the creation of an Office of Telecommunications. They also establish the new regulatory framework, entrust the licensing of telecommunications operators to the Secretary of State, set out the functions and duties of the Secretary of State and the Director General and provide for the regulation of telecommunications operators.

Mrs. Elaine Kellett-Bowman: Clause 3(1) (a) refers to the need to secure
such telecommunication services as satisfy all reasonable demands for them including, in particular, public call box services, emergency services and services in rural areas".
However, the catch appears in paragraph (b), which refers to the need
to achieve a return on capital employed sufficient to enable them to finance the supply of such services".
That could make the provision of such services in rural areas jolly expensive.

Mr. Jenkin: In my speech, as in the process of liberalisation, I am not going fast enough for my hon. Friend. I shall be coming to the point that she has raised.
The new regulatory system established by the Bill is a major reform. It is a recognition of what has been happening in the market. Until now, BT has had what has been known as exclusive privilege: only BT has had the right to run telecommunications systems and anyone else had to be licensed. In most cases BT was the licensing authority.
With competition, that has become entirely inapproriate. BT has, in effect, been licensing its own competitors. The 1981 Act made a number of changes to permit wider competition, but the Bill finally removes from BT both the exclusive privilege and the power to license others. The power will be vested in the Secretary of State, and BT will need a licence, just like any other telecommunications operator.
Licences will contain conditions about how systems are to be run and what services are to be provided. It will be the duty of the Director General to monitor how licensees implement the conditions.
Whatever view may be taken about the proposals for privatisation—I understand the controversy surrounding


that—the new licensing system should command general support. It cannot be right for any commercial enterprise to have the power to strangle its competitors.
Clause 3 sets out the guidelines that require both the Secretary of State and the Director General to have regard to
the need to secure … the provision throughout the United Kingdom of such telecommunication services as satisfy all reasonable demands … including, in particular, public call box services, emergency services and services in rural areas".
When I issue a licence to BT under the Bill, it will require BT to provide these services, as at present, where it is practicable to do so.
Last July, when I announced our proposals, I gave the House a firm assurance that anyone who can obtain a telephone under the present arrangements will be able to do so under the new arrangements. I reaffirm that today.
In its press notice of 19 November, BT itself states that it has
accepted a continuing responsibility for services to the community including those in rural and outlying areas.
I am sure that the whole House will welcome that. It is, in fact, a logical assurance in commercial terms. The value of a telephone network is commensurate with the number of people connected to it. If BT were to neglect areas already provided for or opportunities that may become available in the future, that would devalue its own network.
I have gained the impression that the argument about availability of the network has now been resolved and that, as my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) suggested, the controversy has turned to the question of pricing. I remind the House that there are already differences between one customer and another in connection charges for new subscribers. Connection now costs more in remote rural areas than it does in the towns. The Director General will ensure, however, that the licence conditions about avoiding undue discrimination in connection charges are observed. That will be covered by the licence, and the duty to enforce it is laid down in the Bill.
On the cost of calls, at present BT does not account separately for services to rural areas. However, once the initial installation has been carried out, there is no evidence that the cost of telephone services is higher in rural areas than in towns and cities. Indeed, some operations are significantly cheaper away from densely populated areas. It is cheaper to install wires overhead than underground. Exchange equipment is normally simpler, land and buildings are usually cheaper and labour costs are often lower. These factors go a long way to balance the less intensive use of the rural network and should of themselves provide substantial reassurance for those in rural areas who have expressed anxiety about the future cost of these services.

Sir Peter Mills: I am grateful for what my right hon. Friend has said, but we need more reassurance in view of what has happened in other spheres. For instance, the big petrol companies have certainly withdrawn from rural areas, making petrol far more costly. There is great anxiety in rural areas that the same will happen again.

Mr. Jenkin: I understand that fear. That is why I have dealt with this at some length. However, I counsel my hon. Friend not to draw parallels between such very different businesses.

Mr. John Golding: rose— —

Mr. Jenkin: So far as one can ascertain, as BT does not at present keep separate accounts, once the network is there the cost of calls should be no greater.

Mr. Anthony Nelson: Many of us will be reassured by what my right hon. Friend has said. We hope that the changes will not lead to substantial differentials in cost per unit for rural areas. If my right hon. Friend's hopes are not realised, however, will there not be implications for the extent to which we have to provide assistance through the social security system for those unable to afford telephones and those worst affected by the charges?

Mr. Jenkin: That opens much wider questions. I am grateful for what has been said about our intentions, which are absolutely clear. I should reassure my hon. Friends that the licence will spell out the obligations very clearly and will include a provision about avoiding undue discrimination in pricing.

Mr. Golding: Will the right hon. Gentleman give way?

Mr. Jenkin: If the hon. Gentleman will forgive me, I will first finish replying to my hon. Friend the Member for Chichester (Mr. Nelson).
The Director General will have the power to amend licences. I shall come to the details of this later. If the licence does not bring about what is clearly the intention of Parliament, there is power to amend the licences to ensure that the powers are effective.

Mr. Golding: In the legislation and advice "reasonable charges" are enumerated. Does the Secretary of State think it reasonable to charge people in rural areas the full cost of installing telephones in outlying dwellings?

Mr. Jenkin: As the hon. Gentleman knows, because he knows a great deal more about these matters than I do, differences already apply in rural areas. If the hon. Gentleman does not agree, he should go and find out. Differences exist, and they are intended to reflect some difference in costs.

Several Hon. Members: rose——

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I am confused. Is the right hon. Gentleman giving way?

Mr. Jenkin: I was thinking, Mr. Deputy Speaker, that I had already given way enough. I should like to continue my speech. Hon. Members will no doubt catch your eye later. I wish to move on to the subject of emergency services.

Mr. Stanley Orme: The right hon. Gentleman has asked for evidence. There is evidence in the constituency of my hon. Friend the Member for Whitehaven (Dr. Cunningham), where a farmer recently received an estimate of £5,000 for the installation of a telephone. That is the price quoted since the 1981 Act. What has the Secretary of State to say about that?

Mr. Jenkin: The short answer is that there are differentials. I have no means of knowing whether the


price quoted in that instance was reasonable. That is being done, although BT is still a wholly owned State monopoly and a nationalised industry.

Mr. Orme: It has happened since the Government "liberalised" it.

Mr. Jenkin: It has nothing to do with being liberalised. Presumably, that is the price that BT quoted. However, I offer the right hon. Gentleman this consolation. Under the existing legislation, POUNC—the Post Office Users National Council—has done a very good job in consumer protection, but it has no teeth. It can do nothing to affect the way in which BT carries out its obligations. Under the Bill, however, consumers will have a contract. At present they have no contract, so they cannot sue in contract and they often cannot sue in tort. Moreover, the Director General will have powers to ensure that the terms of the licence are properly observed. Protection for the consumer will therefore be much stronger than it is at present.

Mr. Bob Cryer: Will the right hon. Gentleman give way?

Mr. Jenkin: No. I must get on.
Clause 3 also deals with emergency services. The 999 service is essential, and I cannot imagine it not being provided. It, too, will be safeguarded by the BT licence. The approximately 77,000 kiosks in the present network are also important as they provide access 24 hours a day for the public, especially those who cannot afford a phone or are away from home. Even more important, the kiosks provide access to the emergency services. Indeed, the majority of 999 calls are made from coin-box phones. Although they account for only 3 per cent. of BT's costs, the kiosks and emergency services are important features of the network. Under clause 3, the licence will require BT to provide these services. We intend that the existing arrangements, whereby BT and POUNC agree guidelines about the provision of kiosks, will continue, although POUNC's function will be transferred to the Director General.
Clause 3 also recognises the need for operators to earn a proper return on capital, sufficient to finance the supply of rural and other services and the development and use of new techniques. The Bill ensures that BT will have the money to do that and safeguards BT's remarkable research and development effort. In this context, one thinks particularly of the establishment at Martlesham.
Clause 3 also provides for the promotion of competition and consumer interests. As I have said, consumers at present have no contractual rights and they often cannot sue in tort. We wish to change that. They will therefore have enforceable contracts. The Director General will exercise the role of POUNC, but with real powers—to ensure that licence conditions are properly observed, to intervene if they are not, to amend licences, to encourage codes of conduct, and so on.

Mr. Cryer: The right hon. Gentleman has laid great emphasis on licences. Is it true that the licences cannot change the primary legislation and that that legislation relates to the provision of services "as far as practicable"? Do not the courts interpret "as far as practicable" as meaning "so far as it is possible within cost", which, in turn, means that rural services and so on will be prejudiced?

Mr. Jenkin: The phrase "so far as practicable" comes from existing legislation and represents no change.
As well as having the advantage of growing competition, consumers will have substantially increased rights and protection.
I come now to the Office of Telecommunications, which will be known as Oftel. A new regulatory system is necessary, because, for practical reasons, telecommunications cannot be a free for all. There must be a framework. BT's exclusive privilege and monopoly role has done that in the past. The regulatory system will do it in future.
Along with the Bill we published one of the documents in our series "Ringing the Changes", which sets out in some detail the way we envisage that the regulatory system should operate. One of the most important factors that has coloured our approach is the inevitable market dominance of BT for many years ahead.
Understandably, BT sees the regulatory system as primarly aimed at it, but Oftel will monitor and regulate all telecommunications operators, all of whom must have licences. Mercury, the Hull network and the Radio Phone network will be regulated in the same way. Oftel will also monitor licences granted to private systems and to the providers of the value-added network services. Although the Secretary of State will grant the licences in the first place, the Director General will be able to amend them. He will do that either by agreement with the licensee under clause 10 or, if the change is not agreed, he can make a reference to the Monopolies and Mergers Commission under clause 11. The decision of the MMC will take account of the public interest and of the criteria spelt out in clause 3.
In its brief to hon. Members, which I have seen, BT has expressed anxieties about the comprehensive nature of the powers in the regulatory system, but I have been pressed by hon. Members from both sides of the House to make sure that the powers are effective.

Mr. Orme: Hear, hear.

Mr. Jenkin: The right hon. Gentleman now says "Hear, hear" when I voice BT's fears that the powers may be too effective. With respect, he cannot have it both ways. I have discussed these anxieties with BT, and I believe that I have gone quite a long way to reassure the board.
We intend that BT shall have the maximum commercial freedom to operate in the market. We intend that the licensing and regulatory system shall, as it were, constitute a light rein and that there should be the minimum of interference with legitimate commercial decisions. BT contrasts that intention, which it accepts, with the powers set out in the Bill and what we have indicated will be in the licences.
I understand BT's concern, but in the last resort the Government must ensure that the criteria set out in clause 3 are met, and the legislation must contain sufficient powers to ensure that this can be done.
There is, of course, no presumption of guilt. For the ordinary citizen, statute and common law may represent an impenetrable mesh of legal duties and prohibitions, but, happily, most of us can get through our lives without any overt enforcement of those provisions against us. So it will be with this regulatory system. It provides a framework, states the duties and constraints and provides the powers


to see that they are observed. However, in practice the BT board will be free to conduct its affairs with a minimum of interference and control.
In this respect, there is an absolutely cardinal point. The more competition there is, the less need there will be for regulation. However, as a dominant enterprise, BT must be subject to some constraint on the profits that it can earn. We envisage that the licence will establish a regime based on the concept of a maximum real rate of return on assets, with a sliding scale to ensure incentives to greater efficiency and enterprise. If in any year the maximum return is exceeded, there will be an obligation on BT to refund to customers, through their next bills, the major part of any excess profits that it may have earned.
There are, of course, other methods of ensuring that a dominant role is not exploited in the market place, and the Government have commissioned Professor Steven Littlechild of the University of Birmingham to report on a possible alternative arrangement.

Mr. David Penhaligon: Will the right hon. Gentleman give way?

Mr. Jenkin: I must proceed. I have been on my feet for a long time. I hope that the hon. Gentleman will forgive me.
Part IV of the Bill provides for the future privatisation of BT. I expect the regulatory system, including the Director General and Oftel, to be established soon after the Bill becomes law, but neither the transfer of the assets and obligations to the new company nor the issue of shares to the public will take place before the next general election. We are content that the public should decide whether or not this important step should be taken. I suspect that the flotation is at least 18 months ahead, but I have already asked BT to start the necessary preparations and I have appointed merchant bankers to advise me.
Before the issue, we shall want BT plc to have a proper capital structure, and clauses 54 to 56 provide the necessary powers. Clause 58 is important. It will establish by statutory instrument the maximum proportion of shares which may be owned by the Secretary of State or his nominees. To allow the issue of more shares to the public, that limit may be reduced by a further order, but once reduced it may not be increased. In other words, if, after privatisation, a future Government should decide to reverse this process, they would have to come back to the House for the necessary legislative powers. Somehow, I do not think that will happen.
We all remember the rows when the BBC's monopoly was broken by independent broadcasting in 1954. At the time, the Labour Party vowed that it would restore the monopoly, but by the time it got the chance to do so even it realised that it was absurd. So it will be with BT.
Two scares about pensions and jobs have been worrying some BT staff. I am sorry that the right hon. Member for Salford, West lent his considerable voice to exaggerating those scares. I am in no doubt that there is a great deal more support among BT's staff for freeing BT from Treasury control and giving it commercial freedom than was evident on the so-called day of action by the POEU. Some of the threatening letters then sent to individual union members to persuade them to stop work were pretty disgraceful. Indeed, the extent of the misrepresentation by the POEU in its journal and leaflets is a measure of the

weakness of the case that it makes. However, as scares about pensions and jobs have been put about, the truth must be restated.
I have already given a clear assurance that existing pension obligations will be fully honoured. The Bill clearly provides in clause 53(1) and paragraph 12(b) of schedule 5 for BT's pension obligations to be handed on to the successor company. Paragraph 12 states:
It is hereby declared for the avoidance of doubt that—(b) section 53 is effective to vest the rights and liabilities of British Telecommunications under any agreement or arrangement for the payment of pensions, allowances or gratuities in the successor company along with all other rights and liabilities of British Telecommunications".
That is as plain as a pikestaff.

Mr. Douglas Jay: rose——

Mr. Jenkin: Perhaps the right hon. Gentleman will allow me to develop the argument.
Moreover, the trustees of the pension fund have the duty of providing pensions and holding pension contributions in trust. The benefits paid to existing pensioners are governed by the pension fund trust deed. Under rules established by this trust deed, BT's pensioners are entitled to periodic increases in their pensions in line with those enjoyed by most civil servants. The trust deed prohibits changes which would reduce the benefits of any person already entitled to the receipt of a pension. It would not therefore be open to the successor company, even if it wished, to reduce this entitlement.

Mr. Jay: If this large pension liability is to be laid on the new organisation, will it not be less easy for it to raise all the private capital that the Minister has talked about?

Mr. Jenkin: I have already made clear that one option open to the Government would be to use some part of the proceeds to fund either in whole or in part the pre-1969 liability that was laid upon BT because it was an unfunded liability. We have taken no decision on that. It is an option open to the Government. The right hon. Gentleman clearly sees the advantages.
Existing employees are generally members of the pension scheme by virtue of their contracts of employment. As they retire, they benefit from the scheme's rules relating to its pensioners. Any change in those rules relating to employees retiring in future would require the agreement of all the trustees, including those nominated by the trade unions. All trustees are required by law to act in the best interests of the trust beneficiaries.
While no one can ever give unconditional guarantees about the future, any more than if BT were to remain a nationalised industry, there is substantial protection for BT's pensioners and its employees under the trust arrangements. I wish to emphasise that there is nothing in the Bill to change that protection when BT is turned into a public limited company. I hope that the unions, which have done so much to propagate the scare about pensioners, will give as much publicity to my statements as they have given to their scare stories.
On jobs, there is ample scope for increased efficiency in BT, as BT's management recognised when it called last year for a 25 per cent. increase in productivity. I have no doubt that if BT stayed a nationalised industry, with all the constraints on finance and commercial freedom, higher productivity and new technology would steadily reduce the number of staff as fewer peple would be required to man the new equipment.


With the new commercial freedom that the Bill provides and with the new opportunities that financial freedom confers, there is no reason why employment opportunities in telecommunications should not expand in Britain as they have been expanding, for instance, in the United States. If it is really jobs that worry the unions, they should embrace the Bill. This measure is the best guarantee of expanding job opportunities that they have.

Mr. John McWilliam: rose—

Mr. Jenkin: I read the hon. Gentleman's speech in the debate on the Gracious Speech. I have asked questions about the document from which he quoted at such length. That document does not represent the policy of the Government or of BT. It was a document that had been circulated, but does not represent the policy. I hope that the hon. Gentleman recognises that. I give way to him.

Mr. McWilliam: I am grateful to the Minister for making that point. I am still puzzled by a figure that he gave at the Conservative conference—employment being 25 per cent. lower than the existing employment figure.

Mr. Jenkin: The hon. Gentleman should recognise that when I talked about 20 million subscribers and some 200,000 employees, those were precisely what they sound like—round figures. There are rather less than 20 million subscribers and rather more than 200,000 employees. The hon. Gentleman knows that, on large public platforms, one does not give figures to the nearest digit. It may be that if BT remained nationalised jobs would have decreased, as has happened in virtually every other nationalised industry. But with the freedom to compete, expand and diversify, which this Bill provides, there is no reason why there should be a reduction in jobs. BT could be an expanding, advanced technology company, once it is given freedom.
The case for the Bill is overwhelming. The new technology now available means that State monopoly is not only unnecessary but that it has become a significant brake on progress. At a time when most of the world is in recession and when new job opportunities are hard to identify, it cannot be right to keep this growing industry in the straitjacket of nationalisation. The public issues of Cable and Wireless and of Standard Telephones and Cables showed that the market is ready to finance the fast expanding world of telecommunications. So long as BT remains in the public sector, that finance cannot be tapped, that expansion cannot take place and those jobs cannot be provided.
The Bill will give BT the freedom to compete, the freedom to diversify and the freedom to expand which, as a nationalised industry, it could never have.
I ask the House to support the Bill in the Lobby tonight.

Mr. Stanley Orme: The Bill is yet another of the Government's privatisation measures, and it is by far the largest and most far-reaching such measure ever proposed. The Government have no electoral mandate for the Bill, which is irrelevant to the problems facing British industry. If implemented, it will have a devastating effect upon one of our most modern industries and services.
The Secretary of State spoke about the Bill commanding widespread support. There has been more criticism of it in most of the financial press and other

newspapers of his political persuasion than he cares to admit. BT has net assets in the region of £15 billion to £20 billion, which are all publicly owned. BT receives no grant or subsidy from the Government. It has been profitable for the last seven years. All its loans from the State are at market rates of interest.
BT is not a burden on the taxpayer. On the contrary, profits earned by the corporation are reinvested in the business unless the Government insist on special payments to the Treasury. The loan facilities and borrowing requirements of BT should be extended in order to allow for the major development that will take place in information technology and telecommunications. It is absurd that the French telecommunications authority, through a financing subsidiary, is currently able to raise money in the London market while the United Kingdom's telecommunications corporation cannot. The French authority is a Government-owned body.
The Secretary of State has referred to the PSBR. What is needed is a redefinition of the PSBR and the use of flexible financing instruments which would give BT, as currently structured, the flexibility it needs. There is no need for privatisation in any form.
The Bill will create chaos and uncertainty where planning and expansion should be the order of the day. It will take from the British people a national asset that they have owned and to which they have contributed. We shall now see 51 per cent. of this national asset transferred to a minority of shareholders whose only criterion will be profit, not giving a national service.
I wish to deal with some of the achievements of BT. I am aware of past criticisms and of the need for improvement. However, a spectacular advance has been made in previous years which shows BT and its work people in a very good light.
For domestic consumers, the telephone has become not just a useful addition to the home but an essential utility, like electricity. However, the United Kingdom still has a considerable way to go before every household has a telephone. This should be one of the major priorities of BT. Yet, in the current depression, people are having their telephones taken out because they cannot afford to keep them.
What will be the position under privatisation? The Secretary of State talked in round millions, but it is worth noting that in 1971 there were over 9 million subscribers, and that figure doubled to 18½ million by 1981. That impressive record was achieved by an addition of only 14,000 employees to the work force. There has been a willingness to work with change and a minimum of disruption in an industry of changing technology. That has been accomplished within a settled policy of providing telecommunications services for all with the benefit going not just to selected customers.
British Telecom has had to find at least 85 per cent. of its total annual capital needs from its own resources. It needs an annual investment programme of £2 billion at current prices if it is to catch up with the legacy of past under-investment and meet the demands for new information technology-based services. I prefer that the money that comes from consumers is reinvested rather than, as the Secretary of State will make possible, goes into shareholders' hands.

Mr. Patrick Jenkin: The right hon. Gentleman has missed the point. He talked about British Telecom having


the money from its own resources. Where does he think that British Telecom gets that? Ninety per cent. of that investment goes directly on to customers' charges. What other business, growing at that rate, would finance its investment in that absurd way?

Mr. Orme: That is why we are saying that the limit should be lifted and extended. The PSBR should be altered and then British Telecom could borrow in the market.

Mr. John Garrett: The Secretary of State is the one who does not understand it.

Mr. Orme: Last year, British Telecom made a record profit, and the Secretary of State knows that, apart from the reduction in prices, that took place, every penny went into investment.
I want to look at British Telecom's international record. There has been a great deal of criticism of British Telecom. If we look at the provision of services to the business community—taking 100 as a figure—the only countries cheaper than the United Kingdom are Japan, the United States of America—New York only—and the Netherlands. Italy, West Germany and France are all much dearer. Taking the same figure of 100, the Netherlands is cheaper for the private consumer than the United Kingdom. West Germany, France, Italy, Japan and the United States of America—New York—are dearer. That illustrates the service that British Telecom provides at present.
Channel 4 was implemented in record time with the assistance of British Telecom. We all remember the long delays in the introduction of commercial television and Channel 2. British Telecom has made a magnificent effort in a few months.
Every United Kingdom telephone consumer can dial abroad direct to 121 countries—440 million calls which represent 93 per cent. of the world's telephones. That is the type of service that has and is being developed by British Telecom under public ownership and democratic control.
We believe that the proposals of the Secretary of State and the Government will be unhelpful and destructive. I shall deal with the Government's approach to the crucial issue of essential services. The Government have now admitted that British Telecom's competitors will ignore British Telecom's existing obligations with regard to rural and emergency services, telephone kiosks, and national security and defence. While the Bill places an obligation on British Telecom to provide those services, we are not told at what cost, quality and standard of provision. It has already been made clear that the Government will not provide any direct subsidy for that type of service as happens with British Rail and its loss-making services.
Compare that with project Mercury, which has identified the most profitable parts of British Telecom's network and will concentrate Mercury services around them. The linking of 26 major cities, between which the most profitable parts of British Telecom's services operate because they are intensively used by business at premium rates, has nothing to do with providing a national service. Mercury will take the cream and the essential services will be left to British Telecom. In our opinion, that will be at an ever-increasing cost. We shall finish up with an ever more costly two-tier service.
Hon. Members on both sides of the House have every right to be worried about the provision and cost of rural services. The competition that the Secretary of State talked about is not competition to provide telephone kiosks in the North of Scotland; it is competition for the most lucrative part of the service, and I cannot see any alternative to the consumer paying for that.

Mr. Cryer: My right hon. Friend will have noted that the primary legislation includes the qualifying words that services for rural areas and telephone kiosks shall be provided only so far as practicable. The Secretary of State admits that that is in the existing legislation because it places a charge on the service. If the service is too expensive in British Telecom's view, it will not be provided, and the legislation provides the excuse.

Mr. Orme: I accept that. The telecommunications body that will be set up will come under pressure to jettison those services. No doubt there will need to be consultations, but the pressure will be to jettison uneconomic services.

Mr. Donald Stewart: Is the right hon. Gentleman aware that in my constituency, which includes some of the most remote communities in the British Isles, the telephone service is often literally a matter of life and death? Nobody at present, whatever his political persuasion, believes that that social obligation will be maintained if the Bill goes through.

Mr. Orme: I accept what the right hon. Gentleman said. I raised with the Secretary of State the matter of the Brown family of Cold Fell, Cumbria. That arose since liberalisation and the British Telecommunications Act 1981. My hon. Friend the Member for Whitehaven (Dr. Cunningham) said that the figure in question was an estimate and that the farmer could not afford to pay.

Mr. Roger Stott: It is some time since I climbed a telegraph pole, and I am one of the few hon. Members who has done that. As I understand it, British Telecom has calculated that any work done in excess of 100 hours will be charged at the appropriate level. I spent three days at the top of a Pennine fell in the snow connecting a farmer's telephone at lambing time. If these proposals are enacted, that farmer would have to pay British Telecom a great deal to be connected. Before he was charged a nominal fee for connection to the telecommunications system in such circumstances.

Mr. Orme: I take my hon. Friend's point. He speaks from personal experience in these matters.
Another major provision in the Bill sets up the Office of Telecommunications, which will be known in the future as Oftel. This is a major development. This body will have far-reaching powers.
The Government's double standards are made quite clear. BT is to be freed from existing Government controls simply for them to be reimposed under another name with even greater force. Government assurances that a privatised BT will be set free from control and political interference are deliberately misleading. Not only BT, but the Secretary of State for Industry, the Monopolies and Mergers Commission and the Office of Fair Trading will come under the direction of Oftel. This type of interference and control could have a major effect upon the


future of BT to the advantage of its competitors, because obviously this straitjacket will not apply on the same level to Mercury.
It is interesting to note that in paragraph 10 of the Government's publication "Ringing the Changes", it is recognised that the introduction of private capital and increased commercial influence on BT will not be sufficient to ensure that

"(a) BT continues to provide services such as those to remote and rural areas, emergency services and telephone kiosks;
(b) BT continues to provide the systems and services necessary for national security."

Therefore, powers have to be taken, if BT does not comply, to force it if necessary. Once again there is no financial support to maintain these crucial services. They will have to be paid for by the consumer and after the shareholder has taken his share.
As a nationalised corporation, BT has a statutory obligation to maintain its excellent research and development facilities. This obligation disappears under the Bill. The potential loss of BT orders in its research and development facilities could seriously damage British telecommunications manufacturers and could lead to more jobs being lost.

Mr. Patrick Jenkin: The right hon. Gentleman must not mislead the House. We have provided specifically in clause 3(1) (b) the need for there to be a sufficient return on capital to finance the supply of services and the development and use of new techniques. I drew specific attention to it, and I have told the staff at Martlesham that we regard Martlesham's continuation as the research and development arm of BT as being of the highest importance.

Mr. Orme: That is not written into the Bill, and the Secretary of State's words do not carry the weight of legislation. The holder of Secretary of State's office can change. At the moment, there is a statutory obligation. That is now being removed. The Secretary of State has not met that point.
Government policy will cut back BT in three key areas—in the network, in the provision of services and in the provision of apparatus and equipment. If such a reduction takes place, it can only mean that jobs as well as the service will go.
BT has 235,000 skilled and dedicated employees and an excellent industrial relations record. Privatisation will alter dramatically already agreed arrangements. The Bill excludes the very important conditions contained in schedule 1 of the British Telecommunications Act 1981 which were intended to protect the staff. There are crucial omissions from the Bill. There is no requirement to establish negotiating arrangements with the staff or to come to agreements on conditions of employment, arbitration, training, safety, health and welfare. Alongside this, the staff are already aware of an internal senior management document forecasting the possibility of 45,000 redundancies.
The pensions position has still not been clarified by the Secretary of State. The right hon. Gentleman may make an order so that the existing pension scheme is carried over to the new company. But what happens after that? What about the future? What about the pre-1969 deficit? The Secretary of State has been very categorical today. We want to see that spelt out—[Interruption.] The right hon. Gentleman says that some of the money raised may be

used. In other words, no decisions have been taken. It could go to shareholders. It could go to costs. It could go to the Government. Means could be found by other action to provide this money. The fact remains that the money has to be provided. Employees are also worrying that the provision does not include present employees and their future service. If BT is privatised, it will reflect the values, including the pension arrangements, of the private sector.
Clause 38 is a violently anti-trade union provision. The Secretary of State did not refer to it, but I have a specific question about it to which we want an answer before the Bill goes into Committee.
Clause 38 provides:
(1) A person engaged in the running of a public telecommunication system who otherwise than in the course of his duty—

(a) intentionally prevents, delays or interrupts the transmission or reception of a message sent by means of that system; or
(b) intentionally modifies or interferes with the contents of a message so sent,

shall be guilty of an offence.
Does that affect the right to strike? If people strike, are they preventing, delaying, interrupting, modifying or interfering with the sending of a message? Will the Secretary of State give a categorical assurance that that provision does not affect the right to strike?

The Minister for Industry and Information Technology (Mr. Kenneth Baker): I shall deal with that.

Mr. Orme: I am glad to hear that, because there is great concern among the staff—all six unions, including the management unions—about this provision, which could be used against them. I have no doubt that others of my hon. Friends will have more to say about it.
The "Buy British" policy of British Telecom is an integral part of its current role as a public corporation. However, if BT is privatised, no such constraints need apply. In fact, the Secretary of State said this afternoon that there could be open competition, that equipment could be brought anywhere and that it need not necessarily be British equipment. Currently, more than 95 per cent. of BT"s equipment comes from United Kingdom based companies. Most of the 70,000 jobs in British telecommunications manufacturing industry depend upon BT orders. This is sensible and essential if the United Kingdom telecommunications manufacturing industry is to be provided with a means of fighting international competition.
We are aware that large multinational companies based outside the United Kingdom are boasting openly that the newly liberalised United Kingdom market is one of their main targets for new business. Some of the most vociferous supporters of liberalisation—some of them in this House—and privatisation are importers and importers' agents, rather than British manufacturers. As the Secretary of State is aware, there has been a dramatic decline of jobs in manufacturing industry. It would be disastrous in a technology-based industry if open competition were to give these jobs to overseas manufacturers. Imports are steadily increasing, and in 1980 the increase was about 45 per cent. in general technology.
The public are entitled to know on what basis the massive flotation of shares will take place. We are possibly talking here of a share capital of £5 billion or £6 billion. What criteria will be used? How can an assessment be made? We have already had the scandal of Amersham


International and the fiasco of Britoil—both created by this Government. I remind the Government that we are dealing with assets at present owned by 55 million people. There is great public concern about the Government proposals. "Ringing the Changes" states that privatisation will
give the man and woman in the street a stake in owning an important national asset".
What nonsense. Privatisation will put profits into the hands of financiers, put controls into the hand of this Government's friends in the City, and take from the British people what they already own.
Consumer rights will be phased out and replaced by a bureaucratic alternative. The Government are simply hoping to make money in the short term, through a sell-off of State assets, and at the same time will reassign the care of the national telecommunications network to private companies that are more concerned with making deals with big companies than with meeting the needs of domestic subscribers. They are jeopardising a vital national utility.
After privatisation, scrutiny by Parliament over a vital national service will also cease. Privatisation will mean the Government giving away the means of effective control over, for example, personal bank accounts, credit ratings, and other areas which we need to protect and which can be protected through legislation.
Labour will have none of that. "Labour's Programme 1982", carried at our party conference this year by an overwhelming majority, states clearly:
We will thus return all industrial assets sold off by the Tories into public ownership at the earliest opportunity. We will restore the public monopoly in the field of post and telecommunications and return Project Mercury to British Telecom".
That is our policy and that is what a future Labour Government will carry out without equivocation. We promise the Government a long, hard fight on this Bill, and as the issue will be finally decided at a general election, we look to the good sense of the British people to see that this destructive action is never carried out.

Mr. Barry Henderson: I listened with care to the right hon. Member for Salford, West (Mr. Orme), but he was not on his best form today. There were times when his brief was shot out from under him and he staggered from one fallen hurdle to another.
The right hon. Gentleman spoke about the employees of British Telecom. We had a useful and interesting debate on this issue during the British Telecommunications Bill. If I recall correctly, some of his hon. Friends got into difficulties on that occasion when, in an effort to avoid telephone tapping, they proposed horrendous penalties on British Telecom employees who intercepted calls. Some of the right hon. Gentleman's other hon. Friends pointed out to the Committee that British Telecom employees often, and quite properly, could intercept calls in the course of their duties and that it would be wrong to impose criminal sanctions on them. Thus the subject was substantially debated during the Committee stage of the previous legislation, and the Bill is very much a logical extension of the modest measures of liberalisation in what is now the British Telecommunications Act 1981.
That legislation has been immensely beneficial to all customers, both large and small, but as yet we have not seen the widespread benefits that can and will flow from

the liberalisation of private products and services. In fact, the most remarkable advances have come from the notable improvements in British Telecom's own performance since that measure came into law. I was glad to hear my right hon. Friend pay credit to Sir George Jefferson and the nearly quarter of a million staff who work in British Telecom, who have taken a positive view of their future and improved BT's performance, in many ways out of all recognition from what it was before.
I have evidence of that improvement in two respects. Last week saw the conference at Coventry of the Telecommunications Managers Association, at which my hon. Friend the Under-Secretary of State spoke eloquently and relevantly of progress in telecommunications. The members of that association provide a substantial proportion of the total revenue of British Telecom. I heard figures ranging from one-quarter to one-half of the BT revenue coming from the few hundred members of that association. Clearly, those men, who work every day in the business of telecommunications, were impressed by the substantial improvement in BT's performance. The company has provided much better customer satisfaction than ever happened before what we might call BT 1.
When I was first elected to the House, people in my constituency had been waiting for up to 18 months for telephones. Hundreds of people were on waiting lists. Today, hardly anyone in my constituency is waiting for a telephone.

Mr. Golding: Perhaps the hon. Gentleman should bear in mind that when he was elected there had just been a Government under whom they could afford to have telephones. Today, they cannot afford them.

Mr. Henderson: The hon. Gentleman has got it the wrong way round. When I was elected, we had come to the end of a period of Labour Government during which the amount of money put into British telecommunications was substantially less than the amount put into the system by this Government. The notable improvement in services has taken place since this Government came to office, and particularly since the British Telecommunications Act. I welcome that, and I congratulate British Telecom and its employees on the improvement.
British Telecom is moving in the right direction now, but progress needs investment, and that costs money. Here we come to the heart of what will probably be the greatest controversy over the Bill. During the Committee stage of the last measure, the Committee was united in its concern at the strain on British Telecom's finances from the need to extend the network, to update the technical quality of lines and exchanges, and to provide new facilities and services. Despite the increased external financing limit and the loosening of traditional constraints on BT borrowing, which occurred under this Government, I believe that there is still an irreconcilable difference between the need to invest hundreds—perhaps thousands—of millions of pounds and the need to control the public sector borrowing requirement.
There is also a difference of the same kind between the interests of BT and its customers about how much the current telephone accounts are to be loaded to pay for the investment programme which BT must undertake. That is why I believe that the introduction of private share capital is practical and essential if we are to see the kind of growth of the business of BT which I am sure all hon. Members want to see.


A British business man is said to have gone to North America not long ago, having heard about the better telephone service there. The morning after he arrived he rang the telephone company and said "I want a telephone immediately. It is very important. I want to get going with my business." He was a little put off when the man at the other end of the line said "I am sorry, but I cannot provide you with a telephone right away." The business man said "I thought that you were rather faster over here than we are at home." The reply was "I am sorry, but it is impossible to give you a telephone right away. Will this afternoon do?" That is the kind of service that I hope BT will start to provide as a regular feature.
Until the provisions of the Bill are implemented—I wish that they could be implemented even more rapidly than the Government envisage—the vital new investment by BT will have to be paid for by the customers, or by borrowings, to be repaid with interest. In future, borrowings need be limited only by commercial prudence, and much of the capital can be invested by shareholders, who do not need to be repaid and require only to be provided with a dividend, probably at a lower rate than the interest on borrowings that might otherwise have accrued. In that way we can fuel BT's acceleration into the next century and provide new opportunities for the whole telecommunications industry, with immensely important employment consequences. The Bill will also ensure that the general public and industry in Britain can have a top quality service in an area that is fundamental for the growth of the British economy.
Opponents of the Bill, with very few worthwhile arguments on their side, have tried to foster a fear that in some mysterious way people in rural areas will suffer from the provisions of the Bill. I am disappointed that the Convention of Scottish Local Authorities has accepted that kind of propaganda at its face value, so that its constituent local authorities have started to get anxious about it.

Mr. Donald Stewart: Would the hon. Gentleman like to state his belief that rural services will be maintained as well as they are at present?

Mr. Henderson: If I did not believe that, I should not support the Bill with such enthusiasm. That is exactly the sort of thing that was said last year about the British Telecommunications Bill. My rural constituents have benefited substantially from the services that they have had since that measure was enacted.
The Minister, with great clarity, specified his attitude in providing licences to BT to operate its business. He also mentioned the mandatory provisions, which will ultimately be laid down in statute form, requiring him to provide licences to allow BT to operate and to provide those very services in the rural areas about which the right hon. Member for Western Isles (Mr. Stewart) and I are equally concerned. There are at present similar provisions laid upon BT, but there is no method as effective as those proposed in the Bill to ensure that BT sticks to its mandate. Not only is the rural customer likely to benefit from the Bill in many other ways; there is in particular much better provision for the future of telephone services in rural areas and much better protection for the rural customer than there has ever been before.
I should not dream of talking about the various aspects of cabling—usually thought of in the television

context—that will be covered by Thursday's debate on the Hunt report, but paragraph 102, on page 34 of the Hunt report, says:
We were not therefore concerned with the cable technology to be used or with the provision of services on cable which would have no impact on broadcasting policy.
From the definition of a telecommunications system given in the Bill, one could imagine that the licensing and monitoring system proposed in the Bill—particularly in the establishment of Oftel—could be equally relevant in coping with the non-broadcasting elements of cabling. Will the Minister say whether the Government have that in mind?
In the age of optical fibres, non-technically minded people such as myself might be surprised to find that there is no mention of transmission by light in the definition of a telecommunications system in clause 4. Perhaps the Minister will shed an electromagnetic ray on the subject. Even if he does not, I shall support him in the Lobby tonight in advancing the cause of an extremely worthwhile Bill.

Mr. Charles R. Morris: I preface my contribution by explaining to the House that I have spent a number of years employed in the inland telegraph service of the Post Office, and currently I am a Member sponsored by the Union of Communication Workers.
I am delighted and privileged to follow the speech of the hon. Member for Fife, East (Mr. Henderson). I listened very carefully when he paid a well deserved compliment to the staff of British Telecommunications, but I thought that he went a little too far in attributing the progress and advance made in that industry to the passing of the British Telecommunications Act last year and to the introduction of Sir George Jefferson as chairman of British Telecommunications. The hon. Gentleman seems to be unaware of the progress that has been made in technology. That in itself has made a signal contribution to the increasing productivity of BT.
The Bill has been represented in a variety of ways by many people. The Secretary of State described the Bill as offering new opportunities in British telecommunications. The Government have suggested that, by allowing the financial speculator access to the BT network, they will, in effect, be providing for greater commercial freedom. Having examined the Bill and listened to the Secretary of State, I cannot see how he can come to the conclusion that the Bill will be a great step forward in providing new opportunities or can be said to be a dash for freedom. Indeed, the Bill may very well prove to be a leap in the dark.
I have heard hon. Members on each side of the House describe the Bill as a measure of privatisation. It is not It is a measure of piratisation. The Secretary of State and the Director General of Telecommunications will be the pirates in chief. Their role will be to plunder BT' s assets for the Government's financial supporters. The Bill heralds one more episode in the Government's policy of public asset stripping for the private speculator.
In his statement to the House on 19 July the Secretary of State said that the Director General of Telecommunications' job would be to ensure fair competition and prices. How can we ensure that if the Bill creates a basically unfair situation? To illustrate the point,


what degree of fairness will exist between the new British Telecommunications company and Project Mercury when the former will be burdened with existing staff pension liabilities and providing essential but uneconomical rural services and telephone kiosks, while the latter will be exempt from any such responsibility? The Bill is unfair.
What fairness is there in allowing Project Mercury access to the national telecommunications network and limited access to the international telecommunications network with no obligation to make a meaningful financial contribution to either? The Mercury consortium has restricted its system to 26 towns because, as my right hon. Friend the Member for Salford, West (Mr. Orme) said, they represent the most profitable trunk telecommunication lines in Britain. The Government have encouraged Mercury in a cream-skimming exercise. When Mercury is fully established, it will employ only a handful of administrators and executives. The maintenance of national and international telecommunication networks will remain the obligation of the British Telecommunications company.

Mr. Cryer: Mercury will be making use of yet another public utility, because its cables will run along British Rail docks. That is the first time that a public transport industry has provided such a facility. Therefore, Mercury will yet again be making use of a vital national asset.

Mr. Morris: I accept that. However, the real difficulty in the future development of Mercury is that it will be allowed full access to domestic telecommunication systems and limited access to international telecommunication systems. Inevitably, Mercury's first demand to a future Secretary of State will be for greater access to the international telecommunication network. That is where mercury will make the real money.
There is even greater cause for concern in the Bill's impact on jobs in BT's equipment manufacturing industries. Hitherto, successive Governments have rightly put constraints on BT in relation to where it can purchase its services and equipment. United Kingdom based companies supply 95 per cent. of BT's equipment. Most of the 70,000 jobs in BT's equipment industries depend on BT's orders. A firm home market is vital for export success. However the privatisation of BT will inevitably mean a move to a world-wide sourcing system as pressure to maximise profits increases. For evidence of that one needs only to look at what happened after the so-called liberalisation of telephone equipment supply under the British Telecommunications Act 1981. Only two of the 96 telephone handsets from other than BT sources which were submitted for approval were made in Britain. The Bill will encourage that.
Irrespective of the importance that we attribute to financial and employment considerations, the Bill will lead to the breach of a principle which, over the years, has characterised the British telecommunications service—availability for all.
Everybody in Britain now has access to a telephone. However, given the pressure to maximise profits to maintain shareholders' dividends, how long will it be before a telephone is denied to those to whom it is a lifeline? I was rather surprised to hear the Secretary of State dismiss such people as the 2 per cent. or 3 per cent. of BT's account payers. The elderly living alone and the

disabled in rural areas are heavily dependent on telephones. As that delightfully entitled document "Ringing the Changes" says, they are the people in need who will be subject to the pressures of the market place.
One fascinating objective has been advanced to justify the Bill. In the words of the Secretary of State, it will free BT from the existing web of Government controls. At present, BT is accountable to the Department of Industry and the Secretary of State and, in the long term, to the Treasury. Henceforward, there will be the Secretary of State, the Director General of Telecommunications, the Monopolies and Mergers Commission and the courts. It is difficult to understand how one can equate that catalogue of new regulatory controls with removing BT from the existing web of Government controls.
At a time when the nation is confronted by major economic difficulties and unemployment problems of frightening proportions, the Bill is a political irrelevance, and it is bound to cause anxiety to the 235,000 members of staff of British Telecom who have invested their livelihoods in the provision of a telecommunications service for Britain. If the Bill is not rejected now, I trust that the British people will reject it, before its implementation, at the forthcoming general election.

Mr. Richard Page: Regrettably, the Opposition's contributions so far show all the signs of the mentality behind the trench warfare of the First World War, because they resist any form of change and block any ideas. They do so at a time when change is occurring at a rapidly increasing rate.

Mr. Golding: Is the hon. Gentleman aware that the British troops in the trenches won the war for Britain?

Mr. Page: The hon. Gentleman may be happy with the manpower cost, but I am not. That was not a very good example to quote.
I used that analogy to demonstrate the unsatisfactory basis of the Opposition's case. [Interruption.] I hope that the hon. Member for Keighley (Mr. Cryer) can understand that. Sometimes it is necessary to spell out to him the telecommunication difficulties that face the world. Hon. Members should consider the philosophy behind the Bill. The ambition to set society in a particular mould is not part of the Conservative philosophy. Such social engineering is the prerogative of the Left and of the Opposition. At the most charitable, their actions are symptomatic of heavy-handed paternalism, and at worst they are a form of social engineering that leaves individual choice to the firm control of the State's diktat.
The Government's efforts to expand the private sector of our mixed economy—exemplified by the Bill—are made more in response to public wishes than to any particular ideology. The change of emphasis in the past few years represents an evolution of the national mood and is in direct opposition to the Labour Party's concept of near universal public ownership. Indeed, that helps to explain the Labour Party's position in opinion polls even at a time of very regrettable high unemployment. Although we do not wish to fashion society, but rather to set it free, it is incumbent upon the Government to give the creators and providers the instruments and tools to take advantage of any change that is thrust upon us. The Government should loosen the restraints upon them so that they can provide the people of Britain with the services that they deserve.


I was glad to notice that three strands were included in the Gracious Speech. First, there is the commitment to return some nationalised industries to private hands. Secondly, the Government recognise the importance of the chips and cables and of the technological revolution within our society. Thirdly, there is a continuing commitment to the small business sector. I appreciate that that last point has little to do with the Bill, but I can hardly resist an opportunity to put in a plug for that sector.
Holding those strands together is the Government's dedication to create an economic framework in which it pays more to invest in our industry than in the slightly sterile area of gilts and deposit accounts. That is why I welcome the Bill. It demonstrates a dedication to denationalisation and simultaneously recognises that with the changed rate of techonology we must have a more flexible and speedy approach to communications and that any change will automatically deeply involve British Telecom.
When that change comes, or, to put it more accurately, when the rate of change increases, as it surely will, it will be natural for those who have had a stress-free and protected existence to express worry and concern. That concern is usually expressed in the reflex reaction of resistance to change in any shape or form. However, like it or not, there are great changes in communications, and we can either try to dictate the course of change or we can have it thrust upon us.
There are those who have pledged themselves to fight to the last rural telephone and vandalised kiosk, but the use of that ultimate tariff barrier—the State monopoly—has not proved to be a springboard from which British Telecom or its supply and manufacturing industries can sweep the export markets or even give the inhabitants of Britain the services enjoyed by those in so many other industrialised nations. For example, the security of an unchallenged home market has led to the delayed selection of the type of digital exchange to be used and so we have continued with the old Strowager for far too long. Although that may have given our telephone manufacturing companies the opportunity to export in the late eighteenth and early nineteenth centuries, it does not offer them such opportunities today.

Mr. McWilliam: If the hon. Gentleman is arguing about the need for Brtish Telecom manufacturing industry to be outgoing and to seek export markets, will he tell the House when BT had the right to manufacture anything for export?

Mr. Page: If the hon. Gentleman had followed my remarks, he would know that by having an unchallenged home market BT has not chosen its equipment as quickly as it should have done. Manufacturers need the strong home base that Opposition Members have mentioned, but they have not known which digital exchange equipment to produce and have consequently lost in the export markets. That is my point.
Behind the resistance to change is the fear that jobs will be lost. That is natural and understandable. However, a glance at the experience of the United States of America shows that in the past decade there has been a considerable increase in the number of those involved in telecommunications, whereas the number of those involved in BT has barely changed in the past decade. The Bill should lead to a substantial increase in the number of jobs in

telecommunications, and it should therefore be supported by the Opposition. However, at this stage, no one should try to predict exactly where the increases in jobs will occur.
There is an overwhelming duty to ensure that competition within telecommunications takes place on an equitable basis. To put it bluntly, BT must be seen to be on all fours with the newcomers that wish to operate under licence. Equally, with that same spirit of equity, I hope that the licence that we issue to British Telecom will not only note the loss-making operations, such as some rural telephones and kiosks, but that the point will be accounted for in the calculation of the licence. It is also fair to say that if telephone kiosks are continually vandalised in a particular area, British Telecom should be able to look to that local area to pay for the cost of that vandalisation rather than spread it over the costs of all the particular suppliers.
Loss-making operations will now be far easier to isolate because British Telecom has moved to regionalised accounting. I, as well as a number of my hon. Friends., could not believe the lack of sophistication in British Telecom's bookkeeping methods when we examined this matter five years ago. I could best describe its operation, as the big pot theory—one threw in all the costs and all the revenue and one hoped that a profit floated to the surface or regretfully, sometimes, perhaps a loss. However, I am glad to say that there is greater sophistication coming and that a far closer accounting procedure is being introduced.
I am worried by the suggestion that British Telecom should be relieved of certain interest charges if it is to pay dividends to shareholders. I wish to resist that suggestion, because it would build an inherent advantage for British Telecom against its competitors. I thank my right hon. Friend for issuing that very helpful document on the role of Oftel entitled "Ringing the Changes." The function of that office will be crucial to the success of this liberalisation measure and, while it will no doubt be probed in greater depth in Committee, Oftel will have to build up considerable expertise in a short time. In addition, there is the difficulty of finding a suitable candidate to occupy the position of Director General.
In the early stages the Director General will have to exercise the judgment of Solomon and to establish as well the essential character of Oftel as an independent body and not one that will be a creature of any faction, whether that faction be political or commercial. That wisdom will have to be there, because on examining the Bill one finds that my right hon. Friend has powers under clauses 7 and 8 to issue licences, but under clause 10 the Director General is given almost equally wide powers to modify those licences, subject only to certain circumscribed powers of veto by my right hon. Friend. I see a possible area of conflict there.
It also appears that the Director General has discretionary powers, but not a duty to enforce licensing conditions. If the Director General decides not to go ahead and act on those powers, there appears to be no right of appeal for any injured third party.
In addition, and looking ahead, I can see the impact of cable and cable television on Oftel's areas of authority. I hope that my right hon. Friend the Secretary of Slate for Industry and my right hon. Friend the Home Secretary are already addressing their attention to this possible problem.
Another matter which I hope will arise in Committee or will be probed by Oftel is the position now occupied by


British Telecom on the various overseas and international bodies, and whether that role is to be continued by British Telecom or be taken over by Oftel. I make a small plea to the Minister about the setting up of Oftel. I should like one of the people appointed to it to have a specific function to examine the role of small businesses and to ensure that their interests are adequately represented on that body.
This will be a challenging step forward. I welcome the opportunity presented by the Bill, and I suspect that it will waken the sleeping giant British Telecom, which is already stirring as a result of the British Telecommunications Act 1981. I look forward to the Bill being enacted, and I congratulate my right hon. Friend on bringing it forward.

Mr. David Penhaligon: At debates such as this one I am often struck by how a casual aside means and tells one more about the Minister's real intentions than does the prepared script, the prepared speech and the prepared message to the House. I recall particularly the moment when the right hon. Member for Salford, West (Mr. Orme) drew attention to the plight of the constituent of the hon. Member for Whitehaven (Dr. Cunningham) who was invited to pay £5,000 to have a telephone installed. I wished to intervene then and ask the Minister whether he approved of such bills, because whether he does or does not approve of such bills is the key to the issue for rural areas.
It is true that British Telecom is justifying such charges, because of the British Telecommunications Act 1981, but there is no reason for charging that man so much, even though the measure was enacted last year. The sheer unwillingness of the Minister to answer that obvious question at that moment worries me and, I assure him, will worry many hon. Members.
By chance, I have looked up the constituencies of Ministers in the Department of Industry. There is the Secretary of State's constituency—Wanstead and Woodford—the rural part of which has a park in the middle of it. Other constituencies are St. Marylebone, Kingston upon Thames and Coventry, South-West. Our sole hope is the Under-Secretary of State the hon. Member for Norfolk, South (Mr. MacGregor). If he believes that he represents a rural part of the country, I suggest that the hon. Members for Cornwall, North (Mr. Neale) or Devon, West (Sir P. Mills), who spoke earlier, should take him on a tour of their constituencies, and even I could make a contribution in my particular part of the country. What matters is not only whether an area is rural but whether it has remoteness at the same time. That is the reason for a great number of the worries about the Bill.
Clause 3 is totally contradictory. It says that the Secretary of State and the Director General shall have regard to
the need to secure so far as practicable the provision throughout the United Kingdom of such telecommunication services … in particular, public call box services, emergency services and services in rural areas".
That is a good clause provided that one does not read paragraph (b), which states that the Secretary of State and the Director General shall also have a responsibility to ensure that those services can provide a reasonable return on investment. That is a direct contradiction. The Minister

knows it, the Opposition Front Bench spokesman knows it and anyone who has spent 15 minutes in a rural area will know that that is true.
What will happen to one of my remote constituents who is lucky enough already to have a telephone installed—this is relevant to the constituents of the hon. Members for Fife, East (Mr. Henderson) and Cornwall, North—when one of our shocking winters strikes and the whole system is demolished, which happens virtually every winter in some parts of the country? At the moment, the system is that a message is somehow given to the Post Office and enormous efforts are made to re-connect that person. It is recognised how remote and how vulnerable he is in inclement weather conditions. What will be the new position? Will a bill be sent for repairing the line? The Minister is usually not so unwilling to take his feet off the Table to answer a question. What will be the position in those circumstances? If the circumstances are as I have described, we will see a steadily declining service to people in remote rural areas because they will not be able to pay the bills for carrying out the repairs to services.
Clause 42 has not yet been mentioned. If it has, I apologise to those hon. Members who have mentioned it. I call clause 42 the "on the rates clause", because I am confident that that is what the Bill is about. It is about a system whereby those who live in the remoter parts of the country will have the whole social fabric of the Post Office stuck on their rates or have no public service at all.
Clause 42 makes it clear that if a local authority is not happy with the Director General of Telecommunications' recommendation, it can pay for something better. That is not parliamentary language, but it boils down to that. Who will the Director General be and what will be his job? If the Minister offered the job to me, I suspect that there would be a great boost of confidence in the rural areas.

Mr. Kenneth Baker: We have in mind that the Director General will occupy an office of profit under the Crown. Is the hon. Gentleman making an oblique announcement to his constituents in Truro that he is prepared to resign his seat if he is offered the position? That is the message that will get through to his constituents, irrespective of whether they are connected to a telephone.

Mr. Penhaligon: I shall examine the salary. This is the only way in which the Conservative Party will have a chance of regaining Truro.

Mr. McWilliam: I am grateful to the hon. Gentleman for referring to clause 42. Will he contemplate the possible view of the Comptroller of Audit on the fiduciary duty of councils providing moneys under the clause, given the courts' attitude to the fiduciary duty of a council giving grants to public transport enterprises?

Mr. Penhaligon: I hope that the Minister will answer that question.
If it is not practical to appoint me as the Director General, I suggest that someone else from the West Country should be appointed. The people of Cornwall may well think it sensible and rational to compel the licence holder to install kiosks at 100-yard or 200-yard intervals throughout my constituency and that of the hon. Member for Cornwall, North. That would be satisfactory for the person laying down the rule, and I do not suppose that there would be great objections from the constituencies.


However, there would be objections from the private investor. His investment will have been made on the understanding that the company will be run reasonably and at a profit and will give a return on his investment.
If the Director General lays down conditions that are far too onerous and too wide-ranging for a business to carry, investors will not be prepared to come forward. Even if they are willing to make an initial investment, they will certainly not be willing to provide the further astronomical sums the Minister has said are required because British Telecom will not be profitable. This is why so many people are worried in areas such as the one that I represent.

Mr. Barry Henderson: I understand that straightforward Socialist Members will assume that private enterprise will necessarily be less effective in providing telephone boxes. Will the hon. Gentleman, who is a Liberal, recognise that in the United States telephone boxes are more numerous and far better maintained?

Mr. Penhaligon: I voted for the liberalisation of British Telecom 12 to 18 months ago, but I think that BT does a rather good job with the telephone network and the provision of telephone kiosks in rural areas. I find the network satisfactory. However, I and many others in the remoter areas are worried that the Bill will cause it rapidly to decline. We are well aware of BT's ambitions to get rid of part of it. It is only the constant outcry from those in the rural areas which has prevented that happening.
The Director General, who will be given the job of laying down responsibilities, will have pressure put on him to recognise that losses are being made and to accept closures. That will happen unless the hon. Member for Fife, East can provide evidence that some of the remoter telephone kiosks in my constituency will be profitable under private enterprise.
Before I was elected to this place, my wife was a sub-postmistress. My wife and I used to empty some of the coin boxes of rural kiosks. It did not take us long to count the money that was in them. In the days when we had pennies we found that the boxes had not collected much more than £2 or £3. Admittedly, I am talking about 10 years ago. However, the kiosks provided an important social service in the area and assisted those who faced emergencies. I recognise that there are often large capital investment costs in providing a basic facility. I am aware also that rural areas will be in difficulty in future. We do have a telephone service in rural areas, and there will be enormous pressure from those areas for a much stronger and firmer commitment to keep it than the one given today. I and other hon. Members will want to pursue this issue in Committee or on Report.
There seems to be some panic about the Bill and I do not know why. It was extremely kind of the Minister's office to send me by special post a copy of the Bill. Unfortunately, it sent it to the wrong address. However, the effort was made and I thank him for ensuring that that was done. The Bill was printed as recently as 17 November and it is a massive piece of legislation.
In an earlier debate I backed the Government indirectly by saying that I was critical of some of the Post Office unions for launching an enormous amount of criticism before the Bill's publication. I now say "Thank goodness that they did". They have had just 12 days since the Bill's publication to comment. That is unsatisfactory. There has been insufficient time for Members to canvass interests

within their constituencies. I managed to meet some regional representatives of the Post Office unions in my constituency and I found the meetings interesting and enlightening. The National Farmers Union has made its view known. The NFU is extremely worried about the effect that the Bill will have.
District councils, county councils and chambers of commerce—I am talking about those that are centred in the area that I represent, because I have not contacted the national networks—have found it impossible to examine the Bill in detail in the 12 days that have been allowed. This is unsatisfactory. I cannot believe that the pressure of parliamentary time is so great that the Government have been forced so rapidly to introduce the Bill, especially when they have said that the Bill, when enacted, will not be implemented in this Parliament.
When enacted it will be implemented only if the Conservative Party succeeds in gaining once more an overall majority in the House. There is precious little support for the measure on the Opposition Benches. If the Conservative Party wins that overall majority, I accept that the then Conservative Government will be entitled to implement it. But what is the rush? Why could we not have a few more days in which to discuss it with our constituents and interested parties before Second Reading?
I do not understand why the Bill has been introduced in this Parliament. If the Conservative Party is able to win an overall majority in the next Parliament, it can be processed then. That Conservative Government would have a full five years in which to enact the measure. It is almost inevitable that there will be 100 new Members in the next Parliament even if the Conservative Party returns to power. The Government are denying them the opportunity of making any input into this detailed legislation.

Mr. David Myles: Does the hon. Gentleman accept that this is a more honest way of introducing the Bill? It means that its proposals will be before the electorate and that it will know for what it is voting. The details of proposed legislation are not always so explicit in manifestos.

Mr. Penhaligon: I accept that that is arguable. If there were two months or six weeks after the printing of the Bill during which opinion could be canvassed before Second Reading, I agree that the hon. Gentleman's suggestion would be at least an arguable alternative means of presenting legislation. However, it is unacceptable that we are discussing for implementation after the next general election a Bill that is complex, detailed and long, when only a miserable 12 days have passed since it was printed. However, this is not the first time that that has happened. I would not say that the Conservative Government are the only Government to have been guilty of that.
I have made some general criticisms. I shall now get down to the basics of the Bill. The Minister went through the old argument—I do not expect him to come up with a new one every time—that greater liberalisation and greater access to markets would improve British Telecom in a mysterious way. However, he should do better and be more precise. He dismissed the Buzby bonds in two or three lines as being capable of producing only £150 million. I should like more details on why the Minister reached that conclusion. It is an important conclusion, as it is the alternative put forward by some people who


recognise that British Telecom has a problem raising investment capital. Some others argue that there is nothing to stop British Telecom, as it is, going to the market and raising money. The Minister claims to have investigated that and to have concluded that only £150 million could be raised.
I can only presume that the Minister's justification for that conclusion is that he believes that the market would not be prepared to invest large sums in British Telecom while it was still under Government control, the assumption being that if it is under Government control it is subject to ministerial direction, and if it is subject to ministerial direction it does not make a good capital investment.
That may be true and right, but if the Minister thinks that he will succeed in raising £1½ billion a year, which is the figure that is suggested, because the controls will have been taken away, how much assurance can we get on the amount of control that will be operated by the Secretary of State and the Director General, as referred to in the Bill? Will they control the industry or not? If it is possible, because of the current controls, to raise only a miserable £150 million, I cannot see why it will suddenly be possible to raise £1½ billion a year, especially when we are assured that the control of the Director General will maintain many of the services that are extremely marginal or obviously unprofitable.
It is clear that the Bill has been introduced by reason of dogma. I take a pragmatic line on whether industries are nationalised. If the Government care to look at the record, they will see that they have received quite a lot of support from the Liberal Benches during this Parliament on various measures of privatisation or denationalisation. They will not receive support for this Bill, mainly because we believe that no good reason has been advanced for the change.
The Bill fits in with Conservative paranoia for always knocking nationalised industries.
At times, they have deserved knocking. At times I have knocked them myself. However, I have never once heard Conservative Ministers say anything good about any nationalised industry in Britain since I have been a Member of Parliament. If the record was a little more even-handed about nationalised industries and Ministers had detailed some advantages for this legislation, even if they were difficult to specify, we might be able to give the Bill some credibility. However, the Liberals will not support the Bill on Second Reading. We shall oppose it as it meanders its way through the procedures of the House.
We have no intention, given that the Bill will, if the Conservatives win, come into force after the next general election, of voting to implement it, if our votes are depended upon for that. That is clear and firm. I give the House that pledge now. However, a lot of fear and concern could be removed if the Minister could improve the protection offered to some of the remoter parts of Britain.

Mr. Gerry Neale: I listened with great interest to the hon. Member for Truro (Mr. Penhaligon). I believe that he has completely misjudged the view put forward by my right hon. Friend the Secretary of State and my hon. Friends at the Department of Industry. It is because they feel that British Telecom has

done well enough to be put into the private sector and that remaining under Government control will hold it back that they want to give it that opportunity to operate more freely. Perhaps my hon. Friend the Minister will confirm this. I understood my right hon. Friend the Secretary of State to say that the part of the Bill relating to Oftel would be implemented shortly after Royal Assent and that we would not have to wait until after the general election for that to happen.

Mr. Kenneth Baker: I confirm my hon. Friend's point. When the Bill reaches the statute book, it is the intention that different parts of it will be implemented at different times. We have said that we will wait until after the general election to implement the parts of the Bill dealing with the sale of British Telecom, but we intend that the parts on Oftel, for example, will come into force shortly after Royal Assent.

Mr. Neale: I am grateful to my hon. Friend for that information.
Having listened to the right hon. Members for Salford, West (Mr. Orme), and Manchester, Openshaw (Mr. Morris), and the hon. Member for Truro, and having read various reports about nations which, years ago, embarked on a liberalised regime in telecommunications, I have found that all the same arguments were advanced, and when I examined what happened afterwards I found that all the fears proved groundless. It is interesting to note that the use of the established network goes up dramatically in some cases, so the revenue that is derived by the public networks enables them to have more money for investment in further equipment.
I shall refer principally to two issues raised by the Bill—competition and regulation—but before doing so I congratulate my right hon. Friend the Secretary of State and his predecessor, now the Secretary of State for Education and Science, and Ministers who have been in the Department of Industry since the election. In 1979 they made plain what they had in mind. Despite tremendous pressure from various sections of British industry—not only British Telecom, but other sections—they moved towards the British Telecommunications Act 1981. They brought forward a process of liberalisation that has done a great deal to open up the market.
Since then there has been the introduction of Mercury and the announcement of cellular radio. Ministers have realised that there were errors in and parts of the 1981 Act that could be improved. I welcome the Bill. It will increase the potential of the telecommunications scene in Britain. The prospects in the industry, both in BT and outside, are good.
The part of the Bill that offers the greatest prospects is that bringing in fairer competition and more sensible regulation. I declare my interest in the industry. I am well aware of how much potential the Bill will bring to British industry, which is contrary to what has been said by Opposition spokesmen.

Mr. Penhaligon: The hon. Gentleman and I know each others' constituencies well. Does he believe that it is to the advantage of his constituents and those who farm in the remoter areas to be threatened with the risk of a bill of several hundred pounds winging its way through their letter box if a storm brings down their connection to the telephone system? When I asked the Minister about that,


the possibility was not denied. Would the hon. Gentleman vote for the Bill if he thought that it would have that consequence?

Mr. Neale: The scares that have been put about will not be anything like as dramatic as the hon. Member for Truro (Mr. Penhaligon) supposes. People in rural areas realise that it is much more costly to provide a service to those areas than elsewhere. The acceptance of that principle is well known. Despite the scare stories that the hon. Member for Truro is putting about, that is a principle that the Minister has taken into account.

Mr. Henderson: Does my hon. Friend recall that many people believed for a long time that British Airways' operation of the Highlands and Islands air service could be done better by private enterprise? British Airways always resisted that on the grounds that no one could make a profit and that it was losing £6 million a year on the service. Under the pressure of the possibility of going into private enterprise, BA has suddenly found that it can run the service at a profit with substantially fewer people and provide a better service. Does my hon. Friend agree that accounting is often not as sound as it should be?

Mr. Neale: Indeed. The hon. Member for Truro may recall the small town in my constituency where all the wiring was laid in a property that comprises six flats for elderly people. There was cabling in the street that served adjoining properties. They were equipped with wiring and telephones, and the people who moved in had had telephones in their previous houses. Nevertheless, they were each charged £55 for the connection simply because a man from British Telecom came along with a handset and connected the telephone to the wiring and sockets that were already in the flats. Therefore, the reverse can apply in constituencies such as mine.
Several hon. Members have mentioned the cash aspect. The right hon. Member for Openshaw described the accounting and purchasing power of BT. BT kindly let part of an exchange site in one of the villages in my constituency to the local parish council for 5p a year for a bus shelter. When, as a matter of convenience, the parish council tried to pay 10 years in advance by sending a cheque for 50p, BT sent the cheque back saying that it wanted a payment of one 5p postage stamp each year. That is a clear case of there being some room for improvement.
I shall now deal with competition. Although the private sector of British industry welcomes the Bill and realises that the time for some form of regulatory authority has passed, it would still like two questions answered. First, how soon will the commendable process of regulation and the sale of BT be completed? Secondly, how determined are the Government to minimise the remaining damaging defects of the British Telecommunications Act 1981?
Private industry fears that the advantages that BT enjoys, and which private industry believes is unfair, will be included in perpetuity in the new licence that BT is to be given. Private industry also fears that that licence will arrive on the regulatory scene before Oftel has got off to a start and before BT is privatised. I have in mind the elements of monopoly or part monopoly that BT has over maintenance, the prime instrument and manufacturing rights.
There can be no doubt that the consumer has a restricted choice in the interregnum before the Bill comes into effect. Moreover, private sector manufacturers and suppliers

must operate with one hand tied behind their backs. I see that the right hon. Member for Openshaw has returned to the Chamber. I listened to him in Committee or the previous Bill. He always advanced his views sincerely. He found it difficult to hide his pain when his hon. Friends supported the division of BT from the Post Office, while he stoically tried to keep the two together.

Mr. Charles R. Morris: The hon. Gentleman has rightly remembered the view that I held about the separation of the Post Office from the telephone system. I honestly believe that history has proved me right. Separation was only a prelude to privatisation.

Mr. Neale: My point on seeing the right hon. Gentleman was that he referred to the danger of jobs being lost in the private sector if the Bill was allowed to proceed. The private sector's view is quite the contrary. Its view is that the Bill will unlock many opportunities to expand and that the greater freedom will bring more jobs.

Mr. Richard Page: Does my hon. Friend agree that since the British Telecommunications Act 1981 BT has improved its service and that this next step will enable it to improve that service still further?

Mr. Neale: There is no doubt that BT has woken up to a whole range of possibilities for supplying consumers with what they want. Maintenance, supply, monopoly over the prime instrument and manufacturing swing the licence terms round to BT. No doubt they will be formalised on the first day that Oftel is established. Before the licence is determined, it must be discussed as widely as possible. Its terms are matters of public policy. I urge my hon. Friend the Minister not to include in that licence any monopolistic rights for BT in the maintenance of attachments.
The statements that my right hon. and hon. Friends in the Department of Industry have made on behalf of the Bill are highly commendable in terms of greater competition, but that competition is in direct conflict with leaving monopoly rights for the maintenance of analogue equipment with BT. The same applies to the terms of reference for Oftel. There are many reasons for reexamining this provision. What is the limit of BT's monopoly rights of maintenance? Does it stretch into the realm of cellular radio to be operated by private sector operators when BT wants access to equipment attached to its own lines?
In the Second Reading debate on the Energy Bill, which gives rights to private sector generators of electricity to connect to the public grid, the Secretary of State for Industry was seeking power to approve generation plant that is to be connected to the grid, but it was not suggested that electricity employees should maintain the private sector equipment.
I see no reason for the BT monopoly over the prime instrument remaining in force. By all means include a right for BT to supply the prime instrument, but not as a monopoly. Prime instruments are becoming much more sophisticated and it is much more difficult to define them. It is not fair that, under the new regime of competition, BT should retain its rights over the prime instrument.
It is interesting to see what has happened in the United States. Efforts have been made to divest American Telephones and Telegraph of the local operating companies. There is understandable anxiety about the fact


that only the Hull operating exchange is to be outside the BT arena. I should have preferred the Secretary of State to retain the right to sell a few other exchanges, so that we could make a comparison of performances throughout the country.
I congratulate the Government on the provisions in the Bill dealing with regulation, but I doubt whether the terms of tariff structure and monitoring will be effective. I am aware of the powers of BT to furnish so much detail to Oftel that it could be almost impossible to monitor it all.
It is clear from the Bill that certain cellular radio equipment will be included in the definitions in clause 52. My right hon. Friend the Secretary of State said that Oftel would be responsible for the licensing of radio telecommunications systems. Will he clarify how far the licence will go? Will it include a radio licence?

Mr. Kenneth Baker: Oftel will not be a licensing authority. It will issue only those licences for which it has delegated authority from the Secretary of State. That is an important distinction between Oftel and the Federal Communications Commission.
The power of licensing, especially for such important matters as radio telephone licences, will remain in the hands of the Secretary of State. Oftel's job will be to police and monitor licence conditions and the operation of the market.

Mr. Neale: One matter over which Oftel should have greater control is the areas presently covered by the Home Office's radio regulation department. It would be better to combine those areas of telecommunications within the one organisation, linked to the Department of Industry. It is becoming increasingly difficult in these days of advancing technology for the two elements of telecommunications technology to be separated. It would be much simpler for radio telecommunications operators in the civil area—not broadcasting—if Oftel took the responsibility.
Will the Minister for Industry and Information Technology be more specific about the role of Oftel in international representation? Private industry is worried about the nature of BT's role and wishes to play a greater part in the various international committees.
I am also worried about the ability of Oftel or the Department of Industry to call for indemnity bonds when issuing licences. Private industry is worried about the delays that are occurring in obtaining specification standards and approvals for equipment on which much research has been carried out and which would benefit the consumer.
Will the Minister consider allowing manufacturers and suppliers to give an indemnity bond to a telecommunications system operator and, having applied for approval of the equipment or submitted detailed specifications to the British Standards Institution, immediately to connect the apparatus to any telecommunications system, on the understanding that they will carry out any amendments required by the approvals board or the BSI?
Will the Secretary of State have the power, under the Bill or through Oftel, to license providers of telecommunications services, as opposed to providers of telecommunications systems or apparatus? Some people are involved only in the provision of services.
The publication of the Bill and the declared aim of the Secretary of State to achieve open and fair trading are

commendable, but the private sector wishes those highly commendable aspirations to be applied from today, rather than having to await the Bill's becoming law.
I assume that consultations are taking place and will continue during the preparation of the draft BT licence, which, I understand, will be submitted to the House. I hope that the unfair advantages that BT enjoys—monopoly rights of maintenance and supply of prime instruments—will be reconsidered. They ought not to be included in the licence.
If the Secretary of State accepts that case he will open up the market in telecommunications, create far more competition and choice, which the consumer deserves, and create the sort of environment in telecommunications which he deserves after all the time and effort that he has put into producing the Bill.

Mr. John Golding: The hon. Member for Hertfordshire, South-West (Mr. Page) mentioned the trenches. When the Bill dropped through my letter box—at the right address—I remarked to my wife "This will mean a winter in the trenches and a spring offensive." Conservative Members who have spoken so eloquently this afternoon will regret having done so when they are in Committee. Their Whips will keep them quiet while we make our points. Public service, not private profit—that is the banner under which the BT unions are defending their members against privatisation, which is just a new word for denationalisation.
Why does the staff of BT oppose privatisation so strongly? Why was the one-day strike against the Bill by Post Office Engineering Union members on 20 October so successful, despite all the efforts of the Government and BT to frustrate it? POEU strikes are a rarity. Since I became a full-time union official in 1960—that is one way of declaring an interest—we have had only one day off on the question of pay, half a day in support of the shorter working week, and two or three half-days in support of other union campaigns, apart from very rare and limited local stoppages.
Given that extremely moderate background, why was the strike called and why was there such a massive response to the call? The answer is that the Bill cuts at the heart of what BT employees expect from their jobs: security both before and during retirement, reasonable pay and conditions settled in a civilised manner, fair systems of recruitment and promotion and the satisfaction of providing a service to the public. POEU members have obtained all these things from public ownership, and they know they are threatened by privatisation.
Job security has always been of paramount importance. Many of our members, particularly those who joined before 1969 when we were still in the Civil Service, joined because there was a pension and job security. The job security agreement is of the highest value. This Japanese-style lifetime employment has brought great advantages to both the staff and the business.

Mr. Henderson: I have listened to the hon. Gentleman with respect, as I always do on such subjects. However, does not real job security come from the expansion and development of the whole business, and is that not more likely to be achieved in the environment proposed in the Bill?

Mr. Golding: The answer is "No"—an emphatic "No" which will be heard by all our members. POEU members have obtained all those things from public ownership, and they know that they are threatened by privatisation. Lifetime employment has produced great dedication and loyalty among the staff, to which successive Tory Ministers have paid tribute. It has brought craft flexibility and productivity bargaining that have been more than a passing whim.
Both lifetime employment and pensions, for which staff made sacrifices in the past, are at risk under the Bill. Private management in this country does not believe in security. It does not believe in lifetime employment for manual workers. It still believes in the harsh Victorian regime of hire and fire, and it is demonstrating that day by day. It even rejects the minimal constraints of the Employment Protection Act. Workers in the privately owned telecommunications manufacturing industry have suffered greatly in recent years. Only last weekend, I read that Standard Telephones and Cables Ltd. intends to cut jobs yet again on withdrawing from system X.
For evidence that jobs will be lost, however, we need only read about the leaks to the effect that BT itself intends to cut 15,000 jobs, and the nods, winks and nudges from civil servants that 45,000 job losses would be more acceptable, so that BT could be sold off more easily.
The excuse given by the Secretary of State today—at the Conservative Party conference he rounded the figure down to 200,000—was pathetic. He did not even have the decency to look as though he believed it. If he treats the Conservative Party conference like that, how will he treat the House? It is clear that the Secretary of State let the cat out of the bag at the Conservative Party conference. He simply took the brief from the civil servants without understanding its implications and without realising that people like my hon. Friend the Member for Blaydon (Mr. McWilliam) would read the speech and draw the correct conclusion—that the Government intend to cut staff so that their friends can purchase BT and make a profit out of it.

Mr. Neale: I have listened to the hon. Member for Newcastle-under-Lyme (Mr. Golding) many times—he had perhaps more opportunity to speak during the Committee proceedings on the British Telecommunications Bill than I was given—and he always advances his views very clearly and cogently. How does he rank the priorities in the mind of a person having a new telephone installed at his home or business? Is the prime objective in paying for BT's bill to have and to use a telephone or to provide jobs for telecommunications workers?

Mr. Golding: Of course, when a person pays a sum of money, it is to have a telephone. I note, however, and I hope that the hon. Gentleman's constituents in North Cornwall will note that he believes that they should expect to pay more for the telephone service if they live in the country. That attitude is not shared by the Opposition. We hope that the electors in the rural areas will get that message.
I am entitled to speak for the staff of BT. The Secretary of State seems to think that he knows better than we do what our members think. He dismisses the arguments about jobs and pensions with a wave, but they are crucial issues for our members. Our members believe in giving

service, but they are also interested in their jobs. Anyone must be concerned about job protection in the present circumstances.
Government officials should stop playing the dangerous game of whispering numbers to people in BT, because it is causing a great collapse of morale among staff. Officials should beware of picking numbers out of a hat and bandying them around. They are talking about men's jobs and about the livelihoods of many women in the UCW as well as members of the POEU. They should not play around in this way. In no way will the membership of the unions be used as pawns in this manner.
There is still great concern about pensions. I listened to the Secretary of State dodging, weaving and ducking the questions that the staff and pensioners have put. It so happens that, by chance, I opened my copy of The Veteran, the journal of the National Federation of Post Office and British Telecom Pensioners, and saw on page 2 a letter signed by the Under-Secretary of State. One would not realise that it came from the same Government, because in that letter the Under-Secretary states:
The future of BT's pension scheme is a commercial matter between BT, its workforce, and the trustees of the pensions scheme, and the Government cannot give any guarantees about future pension arrangements.

Mr. Charles R. Morris: Shame.

Mr. Golding: Having listened to the Secretary of State this afternoon, one would not think that that was the attitude of the Government. The Under-Secretary continues:
This would be so whether BT remains a nationalised industry or has private equity introduced. You will know, however, that the Secretary of State undertook in his speech to the House of Commons to safeguard existing pension obligations".
What does that mean? If the Under-Secretary can give no guarantees about future pension arrangements, what notice are we to take of the Secretary of State's words? We shall find out more about the Government's intentions, because we shall table amendments in Committee that will test them to the full. POEU members want a guarantee that their pensions will continue to be index linked and that in the future there will be no worsening of their pension provisions.
Today, the Secretary of State relied on the fact that the trustees came from either side. What he did not say—what the Under-Secretary had the decency to acknowledge—is that pensions, both contributions and benefits, are settled by collective bargaining. Whether the employer is in the public or private sector will, therefore, make a great difference. The POEU members know that it makes a difference. That is why many of them opted for the public service. They knew that the treatment they got from public employers would be different from that of private employers.
So far, direct assurances on pensions have not been given. I hope that the Minister will tell us tonight that they can and will be given in Committee. If not, we shall argue about this for a long time in the Committee trenches. As I have explained on more than one occasion, the pension of POEU members is one of their cherished assets. The Government can monkey around all they like with some other industrial assets, but they should not do so with the pensions of BT staff.
The settlement of pay and conditions has been extremely orderly. Only one and a half days have been lost through strikes in the history of the industry. Not for us


the bitter telecommunications industrial disputes of Canada, Japan, the United States, Australia, France, Italy, and so on. The Government are always saying how much better industrial relations are overseas. They are always saying that they will improve industrial relations here. I believe that they are wrong in general, but with regard to telecommunications and the Post Office there is no comparison between the strike record of public sector telecommunications workers here and their counterparts overseas. Strikes abroad are commonplace, but here only one and a half days have been lost since 1912. That is what the Government are putting in jeopardy.
National negotiations on defined principles, including productivity, sometimes followed by arbitration have removed the need for constant resort to industrial action. Unfortunately, private employers in Britain do not seem to know how to live in peace. They will be tempted by local bargaining, payment-by-results schemes and all the other elements of private pay bargaining that have been so disruptive in Britain. They will no doubt try to abandon the sophisticated joint consultation that has been developed over the years, because British private management still believes that an assertion of managerial prerogative—its divine right to rule—is more important than achieving results through harmony. The POEU members prefer civilisation to the jungle.
As part of that civilisation, they insist that recruitment and promotion be on merit. That is largely true of BT, thanks to its Civil Service origins and the vigilance of the trade unions. That should be contrasted with what happens across much of British private industry.
British private industry has never consciously provided for the promotion of all its staff. It has never put in the effort not only to provide training facilities and to encourage them but also to ensure that there is machinery to remove unfairness. In private industry, who one knows and what group one belongs to are often still completely decisive. That is not good enough for the POEU.
I am appalled at the waste of talent within British industry. I am appalled by the lack of training and the lack of promotion facilities. I am appalled by the class barriers within British industry that inhibit the development and the potential of all those working in it. For all its faults, British Telecom does not suffer from those disadvantages. It is possible for working people to rise within BT. It is possible for them to utilise fully their talent. One loss in going private would be the adoption of private industry standards in recruitment and training. "Who you know", not "What you know" would become paramount. At the moment, within British Telecom, it is, in general, what you know and not who you know that is important.
Our members want to continue to provide a national public service based on meeting the needs of people rather than meeting the demand for profit by City financiers, determined to distribute it to shareholders. The POEU wants profits, but profits that are used to modernise and expand a public service. It wants to provide a service that brings the telephone within reach of all our people. Even in the early 1960s, we were campaigning for a phone in every home. In 1982, the cost of a residential telephone in Britain is, on average, lower than in West Germany, France, Italy, Japan and New York. The staff wish to keep things that way.
Those hon. Members who talk about the speed of fitting telephones in New York must remember that in that city, as over much of the United States, a shared service is the norm. It is much easier to tell those who ask for a telephone that it can be added to the switch being used for eight other telephones. Public resistance to a shared service in this country has made it more difficult to provide a rapid service. I do not believe that the British public are prepared to go American. They do not wish to share their telephones with seven or eight other people. Getting rid of the shared line was a big issue in the early 1960s. I also recall that the New York telephone system almost collapsed through neglect and had to be saved.
One feature of the United States that has not been mentioned by Conservative Members is the great difference in the quality of service given in the remote rural areas compared with the cities One gets what one pays for from private enterprise. That is what happens in the United States. Unfortunately, Conservative Members do not visit remote parts of the United States to test the telephone service.

Mr. Myles: My son returned yesterday after spending five months in the United States as a delegate of Scottish young farmers. He visited the remote areas and informs me that one of the matters that impressed him was the efficiency of the telephone service.

Mr. Golding: I must meet the hon. Gentleman's son and discuss the issue wth him. The National Farmers Union will be interested to hear what the hon. Gentleman says. The NFU opposes the Bill. It is the first time that I have known the farmers line up with the radicals on the Opposition Benches. I am grateful to the hon. Gentleman for drawing attention to that.
Those who defend the United States system will know that all hell is now let loose in Congress because of proposals to increase still further the charges—they are already higher than those in the United Kingdom—for many residential subscribers because of the ending of cross-subsidisation. Conservative Members also want the ending of cross-subsidisation—the principle that business tariffs are higher than necessary in order to ensure that residential subscribers pay less. Tariffs in the City of London are higher than is necessary in order that charges in the Highlands and Islands can be subsidised. I am a firm believer in cross-subsidisation. Even in the United States, however, when electors and representatives in Congress are confronted by the pure theory of competition, they get as upset as Opposition Members in this House over the introduction of the Bill.
Under public ownership, our members will go on increasing productivity. Between 1971 and 1982, the number of telephones installed per BT employee has gone up from 65 to 112. I am not talking about what has happened since the British Telecommunications Act 1981. Conservative Members wish people to believe that there has been a sudden conversion on the part of BT. That is not true. The figures to which I have referred are for the years between 1971 and 1982.
If private industry had been able to match this record, there would be no problems. What other industry has doubled its output in 10 years with only a 5 per cent. increase in staff while improving the efficiency of the system? The problem is that British Telecom has become the victim of the propaganda of Conservative Members


who are more concerned with trying to hand over the future profitability of telecommunications to their greedy friends in the City than telling the truth about the virtues of British telecommunications.
The staff have co-operated fully. Indeed, over modernisation they have often taken the lead. They will be more than bitter if the advantages of this co-operation fall to private profiteers rather than to the public good. One can imagine what they say to union leaders who have talked them into acceptance of productivity bargaining in the interests of the system and into acceptance of rapid modernisation. They say that what they have been talked into accepting is to be given away to private profiteers. They argue that their sacrifice and their ready acceptance of change should be used for the common good.
It is clear to our members that privatisation threatens jobs, rewards from jobs and job satisfaction. On these grounds, our membership opposes the Bill strongly. It is not ideological opposition. Nor is it politically motivated. We are, however, bound to oppose it by political means. We could not carry our members on the ideological argument. We could not carry them if our argument was politically motivated.
Our members have a broad spread of political opinion. We could not carry them if it were thought that our opposition to the Bill was blind opposition to a Conservative Administration. We carry our members because they see that the Government are threatening their legitimate industrial interests. The POEU will take political action. We do not take kindly to the Secretary of State's snide remarks. I was bitterly upset in the House the other day when the Secretary of State accused the POEU of telling lies. He has talked in disparaging terms today of our campaign. We have not resorted to vulgar abuse. We shall argue the case. In Committee I hope that Ministers decide that they will also argue the case rather than call us names.
We have matured as a public sector union. We have attracted 95 per cent. membership on a voluntary basis. The POEU is an efficient, effective union. It has looked after its members' interests while taking a responsible attitude to the business.
During my 22 years with the union I have felt that we have sometimes put more thought and effort into achieving an admirable telecommunications system than has management. The POEU leadership does not want British Telecom to go into the private sector or see orderly conduct in industrial matters jeopardised and replaced by private enterprise, conflict and greed.
We do not wish to go into the jungle, but if we are forced, make no bones about it, we shall adopt methods of jungle warfare to look after our members' interests. I hope that will not be necessary. I am used to, and proud of, operating within a civilised industrial relations system well away from the nineteenth century. I am worried that the Government are turning the clock back to before 1912 when the telecommunications system came into public ownership. However, I am an eternal optimist and hope that this bad, mad scheme will never come to pass.

Mr. Dan Jones: Does not my hon. Friend think that it is too late?

Mr. Golding: It is never too late. I am the sort of character who still believes that it is not too late when going down for the fourth time. If we stick to order and

reason and the hope for the future that long-established public ownership can provide, I believe that we can persuade Conservative Back-Bench Members—their unhappiness showed on their faces when the Secretary of State spoke—as we have almost persuaded them about the iniquity of the 5 per cent. unemployment benefit cut, to get the Government off the hook. I hope that Conservative Members who represent rural constituencies—if they have no other occupational interests, as has the hon. Member for Devon, North (Mr. Speller—will finally say to the Government "Enough is enough. Drop the Bill. Let us have public service, not private profit."

Mr. Gary Waller: When the right hon. Member for Salford, West (Mr. Orme) presented the case against the Bill, he contrasted the position that will exist after the enactment of the legislation with that which existed in the past. He talked about an industry that people own. I wonder to how many people the right hon. Member for Salford, West has talked about the matter, and how many, if asked if they feel that they own the telephone service, would answer in the affirmative.
The Bill will permit an element of genuine public ownership. I hope that British Telecom's employees, of whom the hon. Member for Newcastle-under-Lyme (Mr. Golding) spoke, will have a preferential opportunity to invest in their industry. I believe that those who have a financial stake in the company or organisation for which they work have a greater incentive to do their best for that undertaking.
Research on that subject in the United States of America has shown that where employees have a right to invest in their firms, those firms have grown much faster than others. About 25 per cent. of the population of the United States has an equity stake in companies, and generally in their own firms. In this country the comparable figure is about 4 or 5 per cent. I believe that that is one of the reasons why growth in the United States and many of our competitor nations has been so much faster than here.
The Bill is a step in the direction of providing meaningful public ownership to people in a way that has not existed in the telephone service in the past.
The hon. Member for Newcastle-under-Lyme spoke about jobs. He was right to say that they should figure high in our calculations when we consider making changes in the industry's structure. The Opposition's antipathy to the Bill, as expressed by the hon. Member for Newcastle-under-Lyme and other Opposition Members, derives from their belief that nationalised industries are the fount from which jobs flow and are created, while the private sector spells doom to employment.

Mr. Dan Jones: There is truth in that.

Mr. Waller: The hon. Gentleman says that there is truth in that. I want him to consider the position that existed in nationalised industries in the past. A similar view was expressed by the hon. Member for Manchester, Blackley (Mr. Eastham) when, in the debate on the Loyal Address, he said:
Experience shows that every time so-called privatisation takes place, thousands of jobs disappear."—[Official Report, 3 November 1982; Vol. 31, c. 99.]


I suggest to the hon. Member for Blackley and those hon. Gentlemen who have expressed similar views in this debate that experience shows no such thing.
We do not have many examples of privatisation on which to go, but if jobs disappear, as my right hon. Friend the Secretary of State said, it is because of the demand for greater efficiency and productivity. I should expect far more jobs to be created in an expanding industry, like telecommunications. How many of these jobs are in British Telecom will depend on the competitiveness that, as a public limited company, that organisation is able to demonstrate.
It is significant that small companies provide the best prospects for future jobs. I have to say that, looking at the large companies in my constituency, in the past two or three years many have reduced the numbers of people whom they employ. I have also to say that, as the revival of the economy comes, unfortunately many of those jobs will not be replaced, because those companies have managed to bring about greater efficiency in their working operations and in many ways will be well placed to compete internationally when the recession ends. But it is to new small companies that we have to look for an expansion in the number of jobs. In telecommunications, the scope is unlimited, so it is not only British Telecommunications but also many of the small companies to which we must look for this expansion in future.
It may be instructive to examine the employment records of certain nationalised industries since they were taken into public ownership. For example, the National Coal Board, at the time of nationalisation in 1947, employed 703,000 persons. By 1981–82, the comparable figure was 218,500, or 31 per cent. of the figure at the time of nationalisation. I do not blame the National Coal Board for that—I welcome the efforts that it has made to achieve increased productivity—but I am afraid that the NCB hardly stands out as a pillar of the nationalised sector when it comes to increased employment opportunities.
It may be argued that the National Coal Board is not a typical example. That being so, I ask hon. Members to consider British Railways. At the end of 1948, excluding the staff of the British Transport Commission's central services, British Railways employed 673,000 persons. By the end of 1981, only 227,000 worked for British Railways. It will be seen that, as a proportion of the former figure, it was similar to that of the National Coal Board—33 per cent. I suggest that experience points in a different direction from that suggested by those hon. Members who are worried about employment prospects in British Telecom following privatisation.
The reduction in British Railways' total track mileage in the intervening period has been considerable. I doubt whether a privatised British Telecom will move in that direction. The hon. Member for Newcastle-under-Lyme spoke about the great expansion which has occurred in the network in the last 10 years. I should expect that in future a competitive, privatised British Telecom, with access to new sources of finance for investment, would have unlimited opportunities to expand its operations and hence the employment that it could offer.
Some people will be surprised to hear that the hon. Member for Newcastle-upon-Lyme is held up as a figure of moderation in the Labour Party, because the world that

he presented to us was not one which many Government supporters recognised. He spoke of a world in which the nationalised industries provided every kind of benefit and asset for their employees, at a time when there was tyranny and exploitation in the private sector. The hon. Gentleman may have a great deal of knowledge about the Post Office, for which he worked, but I suggest that he does not know very much about the private sector. Of course, just as in the public sector, there are variations. There are many working practices in the private sector which I do not defend, just as there are in the public sector, but I suggest that the impetus for expansion that exists in the private sector is one from which the public sector ought to gain.
Some people, though not many, believe that all private enterprise is, ipso facto, wrong, and that the State should not only provide for all but manage at least the bulk of all industrial activity. Other people argue that everything about nationalised industries is unacceptable and that all that is necessary to bring about the best of all possible worlds is to return the nationalised industries to private ownership.
I believe that that approach is equally misguided. It takes no account of the many other factors that we also need to consider, but there is no doubt that enterprises in the public domain suffer from severe disadvantages, to which I shall come later.
One detects in the utterances of unions in the telecommunications business that their members see their personal commitment to the part that they play in their industry as being under attack in some way. The same applies to other nationalised industries—transport, for instance. It comes not only from the trade unions, but to some extent from management, which often instinctively adopts a defensive posture. I believe that this posture arises out of a misunderstanding.
I am glad that my hon. Friend the Member for Fife, East (Mr. Henderson) spoke about the progress which British Telecom has made, because I believe that the majority of those who work for it go about their jobs in a conscientious way. Our attack should be reserved not for the employees of British Telecom, but for State monopoly. We should attack monopoly wherever it occurs, and, ever since they came to office, this Government have led an attack on monopoly and restrictive practices wherever they have occurred.

Mr. John Garrett: Where?

Mr. Waller: The hon. Gentleman has only to look at the commitment that we made in our last manifesto to ensure not only the elimination of monopoly but an expansion of competition. We have looked not only at the negative side of the equation but at the positive side. We have already dealt with competition in legislation. I remind the hon. Gentleman of the Competition Act, passed early in the Government's period in office.
The absence of competition has a stultifying effect wherever it occurs. Beneficial effects are already flowing from the British Telecommunications Act 1981 and the enhanced level of competition which that legislation permitted.
As my hon. Friend the Member for Fife, East said, the Bill is a logical extension of that Act and will have beneficial effects not only for British Telecom but for its subscribers in both the business and private sector. The fact that subscribers can buy their own extension


telephones and other apparatus instead of having to rent them from British Telecom is a benefit that subscribers in both sectors can already count to their advantage.
The Bill is about widening consumer choice in terms of the network, services and apparatus. Before the passing of the British Telecommunications Act 1981, a subscriber had the opportunity to rent equipment for answering and recording messages, at an enormous cost. Since the passage of the Act, the subscriber—a business man or a domestic consumer—can purchase that equipment at a fraction of the cost envisaged previously. The fact that value added network services are available and are benefiting business and the domestic subcriber is something of which we can be proud, although the Labour Party's opposition to the Bill, if it had been carried into effect, would have denied those benefits to those people. Now we are offering yet more choice, and that is something that the whole House will welcome.
The world has changed since the time about which many Labour Members have spoken. The telephone is no longer the exclusive benefit of a few. Most people today have access to a telephone.
The domestic market is clearly approaching saturation point. Growth must come from second or third telephones and the add-on equipment to which I referred. On Thursday this week, the House will debate changes in cable. In the coining years we shall see developments in telecommunications of which we can hardly dream today. There are great opportunities for British high technology firms to develop their home markets and provide a jumping-off point for exports to the enormous markets that are available throughout the world, and those opportunities will be greater after enactment of the Bill.
Fear has been expressed from all quarters about the loss of the public service element—for instance, the loss of public call boxes in rural communities. The Government gave certain assurances, to which unfortunately many Opposition Members appear deaf. The Office of Telecommunications will provide safeguards. It is right to provide safeguards, because for many years to come, even without its monopoly, British Telecom will continue to have a dominant position in the market.
My right hon. Friend spoke of certain limitations which may have to be applied to profits. I believe that the Government want to promote competition and avoid monopoly in both the private and the public sectors. In the commitment that my right hon. Friend gave, he demonstrated the Government's intention in that connection.
As I said, the world has not stood still. The need for call boxes still exists, but it is not as great as it was now that the vast majority of people have access to telephones of their own. Of course, emergency services are important. The hon. Member for Truro (Mr. Penhaligon) told us about some call boxes which took a limited amount per week. Some call boxes take small amounts, even in a year. British Telecom closed down pay telephones in some areas long before this legislation, recognising that the world has changed. This legislation will not change that. It is ridiculous to require BT to keep available every pay telephone in the country. British Telecom has not done so in the past; nor should it do so in future.
Nevertheless, the management of BT has some justified worries, which it has communicated to hon. Members. It needs, for instance, to know at an early stage about regulatory control. I hope, therefore, that assurances will

be given as soon as possible, so that BT and other organisations and companies in telecommumications can plan ahead with as much certainty as possible.
I do not underestimate the difficulties of British Telecom's inability to borrow on the commercial money market. Clearly a return on the cost of borrowing in this industry is undeniable. The fact that BT is constrained by the PSBR is, and always has been, nonsense, when the extra costs of borrowing have had to be passed on to existing subscribers. Companies in the private sector would not dream of imposing on their existing customers the costs of borrowing for future investment. British Telecom, which is in a growth sector, should have the same advantage. I was opposed to the constraint before, and I remain opposed to it. The Bill will rid BT of that constraint for good.
Future prospects can lead to an expansion of services and jobs in telecommunications. Many of those new jobs will be in BT's own organisation, if it can compete in price, speed of service and quality. In my opinion, BT is willing to accept the challenge. I regret that so many Opposition Members have little faith in BT's ability to compete in this new growth sector.
The Post Office Engineering Union, in the letter that it wrote to hon. Members, said that the present structure of the telephone service was established in 1911. Things have changed somewhat since then. The Bill provides the framework for the industry now and for its expanding future, not only in the 1980s and 1990s, but in the twenty-first century. I therefore welcome it wholeheartedly.

Mr. John McWilliam: I declare my interest as a Member sponsored by the Post Office Engineering Union.
The hon. Member for Brighouse and Spenborough (Mr. Waller) sought to draw a parallel with employment trends in British Rail and the National Coal Board, where, in both instances, demand is reducing. Unfortunately, I do not have time to give him a lecture about the basic economics of employment. In answer to the other beliefs that he evinced this evening, may I hand him this admonition:
Blessed is the man who expects nothing, for he shall never be disappointed".
I was also disappointed by the remarks of the Secretary of State. He accused my trade union—and me, because of some of the remarks that I made in the debate on the Gracious Speech—of scaremongering. I take it ill that a Conservative Member should accuse me of scaremongering, when he produces a document of this size without adducing arguments for why such a change is necessary. Instead, the Secretary of State spent his time castigating Opposition Members and making assertions about the merits of private enterprise and the shortcomings of public enterprise without supporting his statements with figures. That was unfair to me, to my trade union, and to the House.
I shall deal with the Bill. The last hon. Member to do so was the hon. Member for Truro (Mr. Penhaligon), when he spoke about clause 42.
I asked a rather awkward question about fiduciary duty, and all the Conservative Members ducked. They can duck as much as they like but they should remember that there will be a Committee stage. Even if the Bill becomes law, the first time that some local authority, under clause 42, tries to subsidise a telephone service, there will be a


complaint to the district auditor. Then some successor to Lord Denning will say to the local authority "It is outwith your fiduciary duty. You have an overriding duty to the ratepayers". It is the same argument as applies to transport subsidies. It will be no more legal for a local authority to subsidise a telephone service than to pay a transport subsidy. The clause is not worth the paper that it is written on.
Clause 48 refers to the functions of the Office of Telecommunications. It also deals with fair trading, the maintenance of competition, and the avoidance of monopoly. The Office of Telecommunications has to ensure that cross-subsidisation from business profits to other services shall not take place because that will be unfair competition under the Bill and also under the British Telecommunications Act 1981. Yet we hear constantly from Conservative Members that that will not be so. Evidently, they have not read their own Bill. Cross-subsidisation from one service to another within BT will constitute unfair competition.
If an existing service is unprofitable, it has to be cut, or there has to be some kind of subsidy from somewhere. As the Government have steadfastly refused to give any kind of commitment to subsidy, we can only deduce that the service will have to be cut in order to make it profitable.
Hon. Members should be aware that business customers provide 60 per cent. of BT's income, and most of its profits. If it is not permissible to cross-subsidise from those profits into other areas, the consequences will be grave. It appears from clause 48 that it will be illegal so to do. I shall be interested to hear the Minister's comment about that.
The Government argue that the licence given to BT will require it to provide service in the rural areas, not only in the form of kiosks but for the purposes of defence and security. At what price will the rural services and the kiosks be protected? There is to be no cross-subsidisation. The services have to be profitable.
The Secretary of State has suggested that a letter that I quoted did not represent Government or BT policy, but in November 1981, when the tariff increases were introduced, the average residential increase was twice as much as the average business increase. The same discrimination exists in regard to the proposed new increase which has had to be postponed.
There are the regulations about cross-subsidisation for which provision was made in the 1981 Act, the new provisions in clause 48, and the instructions that are quietly being given to BT by the Department of Industry. Already services to customers are being affected adversely.
If the policy of no cross-subsidisation is to be carried out, it is highly likely that in tariffs alone there will have to be a differential. In seaside towns summer is the only time when there is any business so the costs in those towns are much higher. In rural areas the line distances are longer and line usage is smaller. All the various factors combine to make those areas unprofitable, and it is highly likely that, in order to avoid cross-subsidisation, there will have to be differential tariffs.
The current average cost of installing a telephone in the United Kingdom is £540. That cost covers the instrument, the line to the telephone exchange, the overhead wires, the

cabinets, the cables, the equipment in the telephone exchange, the connection to the telephone exchange, the administrative cost, the entry in the telephone directory, the record cards, and so on.
Notwithstanding what was said earlier by my hon. Friend the Member for Westhoughton (Mr. Stott), in the West Country last year a farmer applied for a line and the cost of the installation was £2,000. The farmer paid £70. I am well aware that when any installation takes more than 100 manhours an additional charge can be levied. My hon. Friend the Member for Whitehaven (Dr. Cunningham) will no doubt have a great deal to say about one of his constituents who was heavily clobbered by that regulation. Hon. Members who represent rural areas know how many cases of that sort they deal with. At present, the additional charge is not frequently levied, but if we have the requirement of profitability, it is highly likely that the regulation will be strictly enforced. It is also highly unlikely that it will operate at a level as high as 100 manhours. That figure is likely to be reduced significantly, so that any installation that is a shade above the average number of manhours will involve an extra charge. That is what will happen if, as the Bill says, cross-subsidisation must be avoided.
When the Secretary of State tells the House that no person who has access to the telephone services at present will be denied access to them in the future, that assurance rings very hollow. It will ring particularly hollow when constituents of my hon. Friend the Member for Whitehaven are offered a line for £5,000. Of course, anyone can have a telephone—just as anyone can have a Rolls-Royce—as long as he has the money, but that is not what the Minister said.
There are other aspects of telecommunications with which the Bill does not deal adequately, and with the Government's attitude to profitability it is not possible for the Bill to deal with them. The telephone is a vital lifeline, particularly for the elderly and the chronically sick and disabled.

Mr. Dan Jones: And the medical profession.

Mr. McWilliam: And the medical profession. My hon. Friend will be interested to know the number of times that I have been called out in order to attend a doctor's telephone. I remember an occasion at 10 pm on Christmas Eve when I was trying to get back to my wife and children. I phoned in to say that the last emergency fault had been cleared. I was then sent to a doctor's telephone. I knocked on the door of his house and went in. The lady of the house told me where the telephone was. I asked if there was anything wrong with it and she said that there was not. I picked it up just in time to hear the receiver being replaced upstairs. When I put the phone down and picked it up again, I heard the dialling signal. I had been kept away from my family for yet another hour when I could have been at home.

Mr. Henderson: That is a sad story. I am sorry to hear that the hon. Gentleman was kept out of his bed. I hope that that will not happen to any hon. Members during the passage of the Bill. However, there are oddities in BT's pricing policy. A friend of mine who lives in a remote rural area wanted an extension between a farmhouse and a cottage a few hundred yards away. BT's pricing


mechanism was such that it was cheaper to the consumer to instal a brand new line which stretched over five miles rather than providing the desired extension.

Mr. McWilliam: That must have been before the days of the 100 manhour installation, because in those days it would have been cheaper.

Mr. John Grant: On a point of order, Mr. Deputy Speaker. Would it not be a good idea if the hon. Member for Fife, East (Mr. Henderson), who has made a speech and who has intervened in every speech since, let hon. Members get on with the debate?

Mr. Deputy Speaker (Mr. Ernest Armstrong): Mr. McWilliam.

Mr. McWilliam: The telephone is a vital lifeline to the elderly, the chronically sick and the disabled.
I was involved in initial experiments to obtain home renal dialysis units for people suffering from acute kidney disease. That meant that such people did not need to stay in hospital because they could be treated at home and lead a reasonably normal life. However, it is vital that such people have a telephone to hand at all times when they are connected to the dialysis machine. The telephone is for their safety. It is a matter of life and death.
What will that cost under the cross-subsidisation arrangements and who will pay for it? Will it reduce the amount that is available within the National Health Service.
I should like to acknowledge the assistance given by the members of the Post Office Engineering Union to the chronically sick and disabled over the years. I worked voluntarily with a man who finally received the MBE in developing devices to enable disabled people to use the telephone. We made those devices in our own time, although we pinched the parts from the Post Office. We did not really pinch them, because the Post Office knew what we were doing and what we were using the parts for.
When the Labour Government introduced important legislation for the chronically sick and disabled, Post Office engineers installed telephones, in their own time, without payment, and BT charged the local authority half the installation charge. Under that arrangement, twice as many chronically sick and disabled people received a telephone than would otherwise have been the case. How will such an arrangement continue under the Bill?
The Bill means that rural services and services to the chronically sick and disabled will be drastically reduced. The only kiosks that are profitable—I know, because I used to be in charge of the installation and maintenance of telephone kiosks for eastern Scotland—are those in the major airports, railway and bus stations and post offices. The vast majority do not make a profit. One hundred and twenty-one kiosks have been removed because they proved unprofitable. A few others are supported by local authorities. However, if they must all be profitable, their future is bleak. Either local authorities, whose expenditure is already overstretched, will have to subsidise them, or some kiosks will have to go. Twenty-five per cent. of British households do not have a telephone at the moment, despite what has been said. There can be a high concentration of areas with few telephones and a high concentration of areas with many telephones. That vital emergency service is bound to disappear under the Bill.
There is no mention in the Bill of a nationally guaranteed standard of service, either in terms of the grade

of service—the number of failures per call—or for repair, installation or anything else. The old system provided a service without fear or favour. It did not matter who one was or where, the Post Office provided the best service. As my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) said, productivity was increased 100 per cent. over 10 years, which meant that the desired improvement in service had to go by the board. There will be a marvellous service for those who work in the City of London, in Edinburgh, Newcastle or Birmingham, but God help those in a cottage three miles out of Consett or the man trying to run a new factory in a development area in the North-East, Scotland or Wales.
The Bill is a charter for big business in major city centres. The service for the vast majority of consumers, whether business or private, in other areas—let alone the rural areas—will be provided at increased costs and at a lower standard. It is not the Bill's intention to maintain and improve services in Britain. Indeed, the opposite is the case. It is no more than a charter for the city centres and vested interests. The Bill has everything to do with narrow vested interests, and nothing to do with the national interest. If hon. Members are to support their constituents—at least, the vast majority of hon. Members who do not represent the City of London or the centre of Newcastle—they should, in all honesty, reject the Bill.

Mr. Richard Shepherd: Before I was elected to this honourable House I believed that Luddism was a historical term. However, after hearing Labour Members speak in many debates I realise that it is a central theme of their policies and it is to that that they address themselves, rather than to the challenges of modernising and advancing the interests of our major and modern industries, such as telecommunications.
I accept the contention that the intellectual, as opposed to the dogmatic, argument for transferring the major part of the ownership of a near-monopoly from the State to institutions and individuals must be pretty compelling to induce support for such a move. Regrettably, I am not entirely sure that the arguments adduced by my right hon. Friend the Secretary of State, which are reflected in the Bill, demonstrate that the public interest is particularly advanced by the mere transference of ownership of 51 per cent. of BT.
It is clear from the Bill that British Telecom will continue to enjoy an effective monopoly of telephone services for as far ahead as one can see—unless the Government permit cable operators substantially to provide an alternative service. All the sensible moves in the Bill to make BT more sensitive to consumer needs could, in truth, be applied to a British Telecom plc 100 per cent. owned by the State. The criteria of efficiency could be established by splitting this State-owned near monopoly of telephone services into local operating companies. Why is that not proposed in the Bill?
I start from the premise that the consumer should be king and with the observation that monopolies rarely accede to that. I take it that the Opposition would argue that a State-owned near monopoly might be more altruistic than a privately owned one. That may indeed be so, but it is not unknown that State monopolies, secure in their genesis, act more belligerently and less covertly than those privately owned, which may be subdued by the very vulnerability of their privilege.


Surely those of us who accept that premise that the consumer should be king should ask not so much for transference of the ownership of some of the shares of British Telecom plc as for the breaking down of the monopoly and for competition to be widened to a far greater extent than the Bill envisages. As I suggested earlier, to pursue the first, ought we not to argue that BT should be broken down into local operating companies whose licence to operate would be subject to review? To pursue the second, should we not encourage cable operators to provide a competitive service via fibre optic links between television sets?
I am no seer, but it takes little imagination to envisage a near future in which the television will be the link between homes and offices, and that will have a considerable impact on the nature of British Telecom plc, if allowed. The impact that alternative systems could have on the half publicly owned company proposed by the Government is tremendously important, and I hope that the Government accept that.
It was as a presage of competition that I greatly welcomed the Government's encouragement of Mercury last year. I should have welcomed just as much a more radical spirit in the Bill which embraced a greater acceptance of the urgent need to permit greater competition. It seems to me that the issue was not ownership of this near monopoly, but competition. That is not to say that I do not welcome the limited advances promised in the Bill for making BT more sensitive to consumer demand. Given the course that the Secretary of State has chosen, the Government should regulate the rate of return of British Telecom plc and the basis should be spelt out in advance of the sale of shares. If present profits were restated on a more conventional basis, they would be approaching £1 billion. Even the Americans regulated the rate of return of AT and T until it was recently split up.
I regret that this is a lesser Bill than I had looked for from the Government. It is less imaginative and much less of a stimulus to competition than I had hoped for. I wish that the Government had not bogged themselves down on what they see as the importance of transferring mere shares to the public. There is much justice in what some Opposition Members have said. The public interest in terms either of competition or of the benefits entailed by some of the Bill's details could equally well have been achieved by retaining 100 per cent. ownership of the company. I urge the Government to open up as many opportunities as possible to the new technologies and to accept that it might be reasonable for the whole basis of the near monopoly of telephone services—whether in the form of BT as a publicly owned authority or as a half-owned public limited company of the future—to be challenged by fibre optics through television sets. Indeed, that subject may be under discussion in Thursday's debate.

Mr. John Grant: The Bill raises an extraordinary number of questions. My first question is: why has the time of the House been taken in this way to debate a measure that will not become effective, if at all, until after the general election? The Government admit that they have no mandate and that the Conservative Party's election manifesto in 1979 contained nothing about British Telecom. Indeed, Ministers candidly say that the

proposals will be an issue at the general election. They could be described as the sale of the century. I believe that the Government's decision to privatise BT in this way is profoundly mistaken. However, given the doctrinaire and dogmatic insistence that has been the hallmark of so many of the Government's actions, we cannot complain if the electors are eventually asked to judge.
To a considerable extent, the verdict will have been preempted because the new regulatory body will presumably be in place well before the next general election. Much of the groundwork for the sale will have been done. It is fair to say that it could be unscrambled, but in that case all our valuable parliamentary time, all the administrative and executive effort and quite a lot of public expenditure will have been recklessly and unnecessarily wasted.
The Bill could easily have been introduced in the first Session of a new Parliament if the Conservative Party were to gain—as I certainly hope that it will not—another disastrous term of office. There is no sense in causing upset, uncertainty and confusion now. There is no good reason for the unseemly and remarkable haste that has been demonstrated in pushing the Bill through Parliament. Recently, The Times reported:
The drafting of the new legislation, which will convert British Telecom into a private company before any share sale, has taken a very short time and as a result is expected to be subject to substantial amendment as the Bill goes through the House this session.
The leader in today's edition of The Times underlines that point.
We are entitled to ask whether this will prove to be another case of monumental Government incompetence, in line with the sale of Britoil. Presumably well-briefed journalists have concluded, in advance of the legislation, that we shall have to amend the Bill substantially as we go along, and that suggests that the Government have rushed their fences for all the wrong reasons. The legislation is both massive and complex, and there is no reason to force it down our throats in such an unwarranted fashion.
Indeed, I understand that the Bill has been cobbled together with such extraordinary speed that, even now, officials are busily at work drafting the changes that the Government will have to introduce later. Perhaps the clearest example is that it is inevitable that the House will debate the Bill without the benefit of knowing anything about the detailed terms of the licence that the Secretary of State or the Director General of Telecommunications will issue to enable the system to operate. I understand that the first draft is not even available. It is unlikely that it will be in any presentable form for at least another two months. The Minister may care to comment on that. The licence may be said to be only a guide, but it is a vital aspect of the legislation.
The result of the headlong rush to enact the Bill is that we are being asked to buy a pig in a poke in that respect. The Bill is bad. It is another unfortunate example of the Government's obsession not with improving an economy that has been laid to waste largely as a result of putting into practice their damaging and irrational economic theories, but with meddling in the ownership of British industry to fit yet another set of their preconceived and outdated theories.
When the director-general of the National Economic Development Council, Mr. Geoffrey Chandler, recently called for a truce over the frontiers of industrial ownership


and urged, instead, concentration on competitiveness and efficiency. he was immediately rebuked by the Prime Minister and by her pet poodles at the Institute of Directors. However, it is worth repeating what he said. He commented:
Since the war, changes of Government have imposed changes on industry that were irrelevant and damaging to industrial success and unnecessary to the preservation of democracy.
He said that that had been nowhere more evident than in the "obsessive debates about ownership". I believe that he was spelling out a self-evident truth. We have had nationalisation, denationalisation and re-denationalisation, and so it continues. We are promised a further huge dose of this assault on the public sector if the Government are returned to power after the next election.
We can properly argue about how best to maintain the balance in a mixed economy, but the Government seem to be uninterested in balance. They are seeking to rip apart the whole public sector structure. They do not always find it so easy. The Britoil fiasco, to which reference has already been made, underlines that point.
We also hear that the privatisation of British Airways, which is so dear to the Prime Minister's heart, will be put off until after the election. It is said to be unattractive to investors. British Airways does, of course, carry huge capital debts. Perhaps the Government thought that they could use the money from the sale of Britoil to pay off those capital debts to make British Airways attractive to investors. They may even now be turning their thoughts to using British Telecom cash for that same purpose in due course.
How do we know? The leading article in The Times of 22 November considered that the Britoil episode was pertinent to the British Telecom disposal and warned against haste, as it has again today in its leading article. It said that the Government and their advisers should think very hard particularly about the method of sale. We have heard nothing about that today. One can read elsewhere that the Government appear to be thinking about the method. We are told that they are considering issuing what have been called "free shares" or there might be a public "phone-in" for what have been called "teleshares". One dials a special number to get shares. The House should be able to share the Government's thinking on these matters. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) underlined that point. We should know how the shares are to be sold, and we should know now.
We are told that the British Telecom board will be fully responsible for the first time for running the business and that it will be free from Government control. It appears to me that pretty much the same corporate management will be in charge as now. There will be a great deal of control in one way or another, and some of it will be Government control.
We are told that British Telecom will remain a single entity with no hiving-off of the profitable parts. Sir George Jefferson, the chairman of British Telecom, earlier this month said:
Our first big job was to fight to keep British Telecom together. I don't think many people realise just how strong the pressures have been to break up British Telecom. We've won that battle so far but the pressures are still there.
Those pressures, of course, were largely Government pressures. Sir George Jefferson said that they are still there. That hardly offers confidence for the future of

British Telecom as a single entity, particularly when we know the type of predatory creatures who lurk in the Government undergrowth.
A mass of questions arise from this omnibus Bill. The British Telecom board is anxious about the powers of the Director General. They will enable him to interfere with the day-to-day activities of the enterprise. Those powers can be applied arbitrarily with only a limited appeal available. The Secretary of State did not deal with that point in his opening remarks.
British Telecom fears that the regulatory regime may turn into a heavy-handed bureaucracy to the detriment of the customer and of new technological development. It is interesting that the Post Office Engineering Union appears to have reached much the same conclusion.
There are worries at British Telecom that the financial structure to be imposed will not take sufficient account of commercial realities—particularly to safeguard long-term investment and to ensure a rate of return which will allow for expansion. The Secretary of State said nothing convincing about the rate of return.
For how long will the licence run? Nothing has been said about that. If the licence makes it obligatory for British Telecom to provide a universal telephone service, including the uneconomic rural and emergency services and kiosks, how will that be paid for in a commercial undertaking? The Secretary of State has not filled us in on that point. How can we be assured that British Telecom will not concentrate on the profitable areas and run down or increase the price of other services? Are we not risking a socially divisive position which would only add to the Government's "two nations" approach?
The Secretary of State has been remarkably vague about the licence. Why do we not have what might be called a "model licence" before us as we debate the Bill?
The Bill refers to providing services. The phrase "so far as practicable" has already been mentioned. We are not let into what that phrase means. The Minister, when he comes to reply, must try to make those matters clearer to the House.
Purchasing policy has already been raised. I shall not dwell on it, but it is a fact that 95 per cent. of British Telecom's purchases are made in the United Kingdom, with all the jobs that that implies. What will happen to that policy under the new set-up? How much of the telecommunications network do the Government envisage will end up under British Telecom control? How much will be subject to competition rather than, in effect, a continuing monopoly, unless there is further hiving off?
Ministers referred to 95 per cent. of the United Kingdom market for British Telecom for the foreseeable future. Are we to believe that this great wad of legislation—an 84-clause Bill—is about a 5 per cent. share of the market? Do Ministers contend that there can be a competitive market in the provision of a central telecommunications network? Do they believe in that central network? What is the Government's response to the little Neddy report on electrical engineering which stresses British Telecom's experience with optical fibres and other developments which could significantly cut cabling costs? It would be interesting to hear the Minister's view on that matter.
Some hon. Members touched briefly on the immensely important issue of cable and on the implications of the Bill for British Telecom as a cable provider and, in particular, as the national common carrier. The issue is relevant to


today's debate and will be dealt with in more detail on Thursday. Do the Government accept that British Telecom is ideally placed to supply an integrated national network and to keep British technology in the forefront? Do they accept that that will allow large orders to be placed with United Kingdom suppliers with economies of scale which would put us in a better position in terms of cost to penetrate export markets?
What is the Minister's view about an article written by Lord Weinstock in the Financial Times last week? We are entitled to know whether the Government will take Lord Weinstock's advice. He is not normally found to be critical of the Government, so perhaps they will accept his advice.
Does the Minister accept that for sound technological and commercial reasons, as well as the essential need not to blunder into undermining existing broadcasting standards—he referred to that briefly at Question Time today—it is crucial that a wrong rushed decision should not be made?
I underline what the hon. Member for Newcastle-under-Lyme (Mr. Golding) said about staff cuts. The Secretary of State was less than convincing about that matter. There had been suggestions that the Department of Industry proposed a cut of 45,000 by 1986–87. A specific date was mentioned. Now we hear from the Secretary of State that he was talking only in round figures at the Conservative Party conference. What is the real story?
With regard to the pension fund deficiency, the Secretary of State talked about options. Why cannot we be told which option he favours at this stage before the legislation goes any further?
On the customer side, will Oftel be able to deal with communities and individuals at local level? What sort of regional consumers' network can we ultimately expect? Clause 47 is extremely loosely drawn. It appears that the suggested advisory bodies will be unable to initiate action on their own account. It seems that they will have to wait for the Director General to refer matters to them. That is highly unsatisfactory. As for the changes in legal liability, why cannot customers with complaints use independent arbitration as an alternative to the courts if they wish to do so?
Ministers say that they want to give British Telecom the freedom to react to market forces and to remove it from the political arena. That is to stand the consequence of the Bill firmly on its head. The Bill will ensure that British Telecom becomes a shuttlecock to be batted to and fro all the way to the general election, and probably beyond it. That is not the way to treat the customers, the work force of British Telecom or the public generally. It is not the way to produce an enterprise that will match the communications needs of the age.
I expect that the Social Democratic Party, like the Liberal Party, will want no further truck with this measure. The Bill will reach the statute book in its entirety only by the force of Conservative votes. Once it reaches the statute book, it will require a Conservative majority to ensure its implementation after the general election.
I end with what I hope will be a positive and constructive suggestion to the Government and the official Labour Opposition. This massive and complex Bill may require much amendment as the Government use their majority to steamroller it through the legislative process.

I am sure that in the end the Government will get their way. I noted what the hon. Member for Newcastle-under-Lyme said about trenches. I fought in the trenches in many Committee Rooms over the years. It will do the Government, the customers, the workers, the industry's managers and British Telecom's potential competitors no good if the House approves legislation that has been inadequately considered, ill-digested and in which there are loopholes and gaps which subsequently need plugging. It will do the reputation of the House as a legislative workshop a good deal of damage if that happens. However, that is precisely what happens with all too much of the legislation that finds its way on to the statute book.
The Bill, for the reasons that I have given, promises to be particularly faulty and a clear-cut example of what is wrong. I expect that, in common with other Bills of major weight and controversy, the early clauses of the Bill will be discussed ad infinitum and that a great deal of boring and often irrelevant rubbish will be dragged in while the later clauses—some of them extremely important—will be subject to a guillotine. Many of them will have little or no proper consideration by the House. We all know the futile ritual on such occasions. We all know the hackneyed, partisan and phoney arguments that are employed by both sides in Committee. I have been involved in advancing them—I do not pretend that I have not—and in maintaining the ridiculous system.
I suggest that the Government should open prompt discussions with the official Opposition and minority parties with a view to agreeing a sensible, reasonable and generous—I stress "generous"—timetable for the Bill that will ensure that it is properly scrutinised in Committee and during its other stages. There is a chance to set a worth while precedent. I believe that the Bill should be dropped. However, with the arrogant rigidity which typifies this Administration, I do not believe that that will happen.
This unfortunate Bill deals with a high technology industry in a technological age. I should like to see the House do its best sensibly to eliminate the worst of its technical faults, which do no credit to any of us or to the democratic system if they are enshrined in an Act of Parliament.

Mr. Kenneth Baker: I am sure that the hon. Gentleman's remarks on the Bill's timetable must be addressed principally to the Opposition Front Bench. It will be much in their hands whether the House responds to the constructive suggestion that he has made. The hon. Gentleman has criticised the Bill in many different respects but he has not offered an alternative. Is he content with the status quo? Is he content that British Telecom's investment programme should remain within the sphere of the PSBR and that it should be denied the advantages that we are claiming will result from enactment of the Bill? What is the SDP's policy in respect of British Telecom?

Mr. Grant: The SDP is not in favour of this measure, the effect of which is called "privatisation". The old-fashioned word was "denationalisation". A number of ways have been suggested in which British Telecom could raise its funds. Several hon. Members have suggested that it could go to the market, but it is not necessary to do it in this way. I subscribe to that argument. I accept that the timetable is primarily for the Opposition, but I stressed the word "generous". No purpose would be served in having discussions if the Minister did not acknowledge that the


Bill should be closely scrutinised. It is a massive measure. It will take a long time to consider. I am arguing that it should be properly considered.
The Secretary of State for Industry is not usually the sort of person to use hobnailed boots to try to keep people in line, as does the Secretary of State for Employment, whom I am more used to. However, the Secretary of State for Industry managed to upset the hon. Member for Newcastle-under-Lyme. He was foolish to do so. It is unlike the right hon. Gentleman to be caught without his trousers, like the Chancellor of the Exchequer, as he is a smooth operator, yet he has presented the House with a Bill that is full of more holes and raises more questions than any Bill that I can recall. The debate has revealed his naked political condition. It is not a pretty sight. The Bill is extraordinarily confused and ill-devised. It will mean continuing uncertainty and speculation. It is a doctrinaire measure that will not help to give British industry the shot in the arm that it badly needs because of the effects of the Government's policies. My right hon. and hon. Friends and I will vote against it.

Mr. David Myles: In "To a Mouse", Burns says:
An' forward tho' I canna see, I guess an' fear!
We have heard all sorts of guessing and fearing from the Opposition Benches. We have heard about the Social Democratic Party's trembling indecision from the hon. Member for Islington, Central (Mr. Grant). The members of that party do not know quite what they want. We heard from the hon. Member for Truro (Mr. Penhaligon) that the Lib-Lab pact was not yet dead.
I am pleased to contribute to the debate as a very rural Member and to speak in the interests of rural Members. There are exciting prospects in the telecommunications business—not ones to guess and fear, but ones to look at. There will be exciting developments in technology.
How best can we harness the new technology and get the best out of it? The only way to investigate and to find the best systems is to open up competition. When other countries had adopted better systems than ours our monopoly industry was afraid to adopt such systems or did not have to. In a monopoly it is difficult for the management to decide just where to step in. In the development of the new technologies in telecommunications that was never more true.
When there is a monopoly people do not know whether they should hold back and save public money by not going for optical fibres. They do not know whether they should wait for the satellite and do away with wires. Such matters are difficult for the management. I am not criticising in any way the past service that has been given to rural areas by British Telecom, the Post Office and telephone staff. We have been well served by many dedicated trade unionists. The hon. Member for Newcastle-under-Lyme (Mr. Golding) adequately defended their interests. We need free competition.
The industry should expand. The telecommunications manufacturing industry has lost 40,000 jobs in the last 10 years. The hon. Member for Newcastle-under-Lyme underlined his concern for jobs. He does not have the monopoly of concern. That loss of jobs shows that the mixture of monopoly and protection does not pay. Since liberalisation—that may be a good word—the prospect of an expanding industry has been to hand. I know that the

National Farmers Union has its worries. That is quite right. Nevertheless, I do not share the view that that worry warrants outright opposition to the Bill. The NFU is merely highlighting the difficulties and problems that it believes may crop up in the future—guessing and fearing again. It is important that strong lobbies such as the NFU should voice those fears and worries. Governments depend strongly on the support of members of the NFU and, if I dare mention it, the Scottish NFU. Their views roust be listened to in Committee.
I apologise for not being present when my right hon. Friend the Secretary of State opened the debate. My absence was unavoidable. He stilled some of the worries that are felt in rural areas. I hesitate to repeat myself in front of the present audience but I live in one of the most remote areas in the east of Scotland.
I have a shepherd's house that has a telephone Many telephone poles are used to serve that telephone. I am sorry to say that many of my cows, bulls and others do not respect public property much and occasionally rub and scratch themselves against the telephone poles and shake and break the line. The line is broken often and repaired with admirable alacrity. I admire the trade unionists who come out in all types of weather to repair it.
Nevertheless, competition can improve matters in those remote areas. I have tried to tell the body in charge of that line that it would be better to make it far shorter. I tried to persuade the relevant people that it would be sensible to put the line underground where no bulls or cows could damage it. Nor are there any ploughs to damage it.

Mr. Robert Maclennan: I rival the hon. Gentleman in the remoteness of my dwelling in my constituency. Would be acknowledge that there are extremely uneconomic operations that are vital to the survival of communications in such constituencies? There are in my constituency 42 kiosks that BT considers are uneconomic. It is inconceivable that anyone could run them at a profit. Such kiosks require the cross-subsidisation that is possible within a national enterprise such as BT. Does the hon. Gentleman recognise the reality of that fact?

Mr. Myles: I accept the hon. Gentleman's point wholeheartedly. I also believe that the Government, knowing the people on whom they have to depend, will also recognise that fact. Nevertheless, I do not agree that services cannot be provided as efficiently in rural areas as in urban areas by competition.
Unlike the hon. Member for Truro (Mr. Penhaligon), I believe that this is a bold step that will prove to be a wise one at this stage of a Parliament. It was and is a bold step to introduce this type of legislation at this stage. There is no doubt that the Government's intentions will be judged by the electorate before the Bill is implemented.
I am surprised that the Liberal Party opposes the Bill. Obviously the Lib-Lab pact holds in the desire to maintain the public ownership of the telecommunications industry. I believe that it will prove to be an electoral mistake, but it is not the first such mistake that the Liberal Party has made, and I am sure that the SDP will soon be making many similar mistakes.
Nationalisation has been increasingly unpopular since the 1950s. A survey by National Opinion Polls n August this year showed that 63 per cent. of the electorate—we do not need 63 per cent. of votes to gain an overall


majority in the next Parliament—opposed further nationalisation. Indeed, 35 per cent. of Labour supporters and 68 per cent. of alliance supporters said that they were against further nationalisation. Therefore, I am surprised at the line being taken by the Liberals and the SDP who wish to walk with the media and the public down the middle of the road.

Mr. Tom Ellis: Is the hon. Gentleman aware that the alliance is not proposing further nationalisation?

Mr. Myles: I am delighted to hear that. It is marvellous; we have had two interventions from alliance Members and I am pleased to have agreed with both. However, we are talking about an existing monopoly. Telecommunications is probably changing faster than any other industry and it can harness more new technology than any other industry. Yet the alliance says "We shall oppose".
I hope that adequate guarantees will be given in Committee to quell the fears of rural dwellers and small businesses. A few large users constitute the major usage of the telecommunications system. Small business users and individuals in rural areas fear that the major users may get maximum benefit from the Bill, but I wonder why their fears should be greater because of the Bill than they are under the present system. Given the monopoly power and the trade union pressure that exist at present, why should big users not achieve unfair advantages under the existing system?
The hon. Member for Newcastle-under-Lyme (Mr. Golding) made an impassioned speech and frequently used the word "we". I tried to interpret what he meant by it, and it seemed that he meant exclusively the trade unionists who work in the telecommunications industry. My concern is not just for the workers in the industry, but for the consumers who use the telecommunications system. I trust that the Bill will ensure that they are well served.

Mr. Bob Cryer: It is clear that even Conservatives have reservations about the Bill. The Secretary of State said that millions of people support it, but he produced no evidence to give credence to that claim and Opposition Members have received only criticisms of it.
For all the simple-minded jokery of the hon. Member for Banff (Mr. Myles), the fact remains that the House must deal with the words in the Bill. Clause 3 provides that the guidelines
shall have regard to …the need to secure so far as practicable … public call box services, emergency services and services in rural areas".
The phrase "so far as practicable" has a certain meaning. It means, for example, that if British Telecom decides to refuse a rural service and the decision is challenged in the courts, the courts will interpret that provision as meaning that the cost was too great. That is why those words are used—not by chance, but to allow for the plea that the cost is too high to provide rural services, telephone kiosks or whatever. That is why the National Farmers Union, for once, opposes the legislation. It can see the practical consequences, which the Secretary of State has not yet spelt out, and almost certainly will not spell out in the future.
The Secretary of State—or the runner up, the Minister for Industry and Information Technology, who is to wind up the debate for the last half hour—will talk about licensing. They know full well that licensing will make no difference, because when licensing is discussed the Secretary of State will say that he has to follow the primary legislation, which provides that such services are to be carried out "so far as practicable." The licensing provisions can in no way usurp or change the primary legislation now before us.
I shall deal briefly with other aspects of the Bill, notably clause 49. Certain areas of public ownership provide a degree of security in their operation. For instance, although I have strong reservations about nuclear power, the fact that it is in the hands of public enterprise provides some additional security, because we know that the public service is expected to observe, and generally conforms to, higher standards and that there will be no cost cutting to obtain higher profits.
The Bill hands over massive powers to private enterprise without any safeguards and is a considerable extension of the corporate state. It is difficult enough, in all conscience, for the House to deal with these matters, because the Government regard our democracy as such a fragile flower that discussion and debate on telephone tapping cannot be permitted—I do not mean the giving of names and addresses—as part of general accountability. We are not allowed to discuss it and the Home Secretary dodges all parliamentary questions on the subject.
The Bill hands over virtually unfettered powers to the Secretary of State in this respect, because British Telecom provides a telephone tapping service for the nation. On 1 February 1980, in an article entitled
Big Buzby is watching you",
the New Statesman said:
Britain's national telephone-tapping service appears to operate from a building concealed behind the Industrial Tribunals Central Office at 93 Ebury Bridge Road, SW1, just opposite Chelsea Barracks. This is the organisation which is known in police lore as 'Tinkerbell'. Here thousands of telephone lines up and down the country are monitored every year, and the results supplied to the spy 'customers'—chiefly MI5, Scotland Yard's Special Branch, and the C11 squad.
A massive operation is already carried out by BT, and the POEU has expressed deep concern about it. It has published a document entitled "Tapping the Telephone" and has made four proposals. It states that
there must be legislation to provide an express legal authority for the official interception of communications. We accept the need for mail to be opened and telephones to be tapped on limited occasions by specified authorities … However, we believe that the present lack of an express legal provision for official interception which we have described is unacceptable in a democratic society … Second, there should be stricter criteria for the issue of warrants … Third, there needs to be an independent check upon the judgment of the Home Secretary in deciding upon applications for a warrant or alternatively, the decisions should be taken elsewhere … Fourth, there should be annual published reports to Parliament detailing the number of interceptions authorised in the previous year and commenting on the effectiveness of the interceptions and any changes in policy or procedure. We believe that the present lack of any meaningful kind of political accountability for the interception of communications if fundamentally wrong and that the minimum requirement is that all MPs know the broad picture as it unfolds from year to year.
The Labour Party has expressed exactly the same concern, yet the Under-Secretary, who professes adherence to some sort of liberal view inside the Conservative Party, does not produce an ounce of protection for this massive operation which at present is


undertaken by a public body. To that extent it is accountable in a limited sense, yet it will be handed virtually unfettered powers.
Clause 49 wants some reading to be believed, because the Secretary of State can tell the new Director General, who will be a powerful man indeed:
If it appears to the Secretary of State to be requisite or expedient to do so in the interests of national security or relations with a government"
and so on, he can or cannot do "a particular thing".
Clause 49(3) states:
The Secretary of State shall lay before each House of Parliament a copy of every direction given under this section unless he"—
the Secretary of State—
is of opinion that disclosure of the direction is against the interests of national security or the commercial interests of any person.
In other words, the Secretary of State decides in secret to give secret instructions to the Director General, who by virtue of clause 49(4) is not allowed to reveal those directions. This is a massive power to the Secretary of State, and on that ground alone the House would be right to reject such a handover of power.
It means that a quasi-private enterprise organisation, which in due time the Secretary of State wishes more and more to hand over to private enterprise, will be operating in total secrecy without any accountability to the House of Commons. That is totally and utterly wrong in any sort of democracy. I am pleased that my hon. Friends will be joining me in the Lobby against the Bill. We shall be voting against the erosion of a public service, the erosion of facilities for rural areas and increased charges for the rural areas.
The hon. Member for Banff talked about his beasts knocking down telephone poles. He will certainly be charged when the Bill comes into force. It will not be a question of trade union members going out in the snow in deepest midwinter to carry out repairs as part of a service—they will certainly go out, but there will be a bill as long as a roll of wallpaper for the sort of services that the hon. Gentleman described.
The legislation puts profit before service. That is the biggest principle upon which hon. Members will be voting. All this business of competition is so much nonsense. What is happening is that the Tory Government are handing over to their backers the juicy bits of the public enterprise sector.
The legislation will not be brought into effect before the next election. This is to encourage those Tory business men who are a little reluctant to contribute to the party coffers to mount a bigger campaign for the return of the Conservative Government and so benefit from the plums offered by privatisation. Subsidiary to the main principle is the fact that the House is being deliberatly denied its proper and due accountability. In a democracy, we demand nothing less.

9 pm

Dr. John Cunningham: In yet another privatisation debate—this time on the proposed privatisation of a corporation that has been in public control for more than 70 years—the arguments in favour of the measure have proved no more convincing than on previous occasions.
The debate has completely divided the House. Apart from one or two questions to the Secretary of State by the

hon. Members for Chichester (Mr. Nelson) and for Devon, West (Sir P. Mills) who expressed concern about rural areas, Conservative Members have dutifully supported the proposals. They have adduced the argument that, although the Bill represents a drive towards a more commercial approach, the loss-making services of British Telecom will nevertheless be safe, and services to people in remote rural areas will be secure. That is not a very convincing argument. Needless to say, we on the Opposition Benches do not accept it.
Nor do we accept the arguments advanced about the jobs and the pensions of those people who work in telecommunications. My right hon. and hon. Friends, the Liberal Party and the Social Democratic Party have expressed good reasons for opposing the measure. The arguments and assertions heard from Government Front Bench and Back Benches alike are the same as those heard on previous occasions. The case for the Bill is broadly that privatisation will bring better, cheaper and more efficient services to Britain, that existing consumers' interests will be protected, that new technology will be forced in by competition and that the ending of BT's exclusive privilege will bring no danger and no risk to the quality, level and extent of existing services.
In addition, it is argued that British Telecom. freed from Government control, will be more flexible, more responsive to the market, more enterprising and more able to raise capital by some mysterious method. It is also argued that the corporation will have complete freedom to act in the market. Whatever else the Bill says about, and intends for, British Telecom, it is certainly not the case that, if it becomes an Act, British Telecom will be free. On the contrary, it will be more hedged around with controls both by the Secretary of State and by the Director General whom he proposes to establish than it ever has been.
The hon. Member for Fife, East (Mr Henderson) argued that British Telecom would be better able to raise finance and that the market would somehow respond. The hon. Gentleman must have been absent when the Britoil launch took place. He can have taken no cognisance of what happened in that instance. He needs no reminding, I am sure, that this is a much bigger corporation and that there is much more at stake.
My right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) put his finger more accurately on the key issues—the threat to existing services and consumers. He talked of the creaming-off, as instanced by what Mercury proposes to do by going for the major trunk routes which will damage British Telecom and its income from such routes. He stressed the fears of the Telecommunication Equipment Manufacturers Association that imports will damage jobs both inside British Telecom and in its supplying industries.
Every Conservative Member without exception seemed to argue that, whatever else privatisation would do, it would somehow almost magically ensure that existing services would survive and that the problems faced by British Telecom would go away. The hon. Members for Hertfordshire, South-West (Mr. Page), and Cornwall, North (Mr. Neale) expressed similar views. I enjoyed the greater reality of the speech by the hon. Member for Truro (Mr. Penhaligon) who pointed out, as I know well, that services in rural areas are already under considerable threat. It is axiomatic that if British Telecom, as a result


of this measure, has more commercial forces placed on it, the likelihood is that those threats to rural communities will increase. The evidence leads us to that conclusion.

Mr. Richard Page: It is obvious that the hon. Gentleman has not had to wait for 18 months for a standard PABX 7 system to be installed as my company has. That is the real world and the reality of British Telecom service.

Dr. Cunningham: The hon. Gentleman is dealing with a separate point to which I shall refer later. At the moment we are discussing services to consumers in rural areas.
My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) made a forceful speech dealing with the strong fears of members of the Post Office Engineering Union. My right hon. Friend the Member for Openshaw expressed similar views which are held by members of the Union of Communication Workers. Those views were supported by my hon. Friend the Member for Blaydon (Mr. McWilliam). If Conservative Members do not think that that anxiety is shared elsewhere, I refer them to the News Digest of POUNC. One of the latest issues is headed:
An Uncertain Future for British Telecom—and Telecom Users.
There is no doubt that the statutory watchdog for consumers' interests in British Telecom shares our fears. Those fears are shared also by Rural Voice, an association of nine organisations representing rural communities. They all be eve, as we do, that services will be threatened.
The Secretary of State asserted that private enterprise was better by definition. He admitted honestly that the real problem faced by the Government with regard to British Telecom was that they do not like public ownership. He said that monopoly had been bad not only for customers but for British Telecom itself. He went even further. He said that he wanted to see British Telecom become more like American Telephones and Telegraph. Of course, if anything, AT and T had a bigger monopoly and a bigger control of the market than British Telecom. The Secretary of State let the cat out of the bag in his reference to what he said at the Tory Party conference about job loss in British Telecom.

Mr. Patrick Jenkin: indicated dissent.

Dr. Cunningham: The right hon. Gentleman may shake his head, but he was singularly unconvincing when that question was put to him.

Mr. Jenkin: I can assure the hon. Gentleman that he will study that speech from beginning to end and find nothing in it about job loss in BT.

Dr. Cunningham: The idea that somehow, by a slip of the tongue, he was able to lop off almost 20 per cent. of the work force of British Telecom—a Secretary of State for Industry making a mistake of that magnitude—and then have us believe that that was just what it was is not in the least convincing.
On the other hand, the right hon. Gentleman did not take time to give us any idea about what the licences will look like. Nor did he give any description of the regulations that will surround the operators who obtain those licences.
What the right hon. Gentleman says in one of his handouts entitled "Ringing the Changes" is:

BT plc will not be singled out for special controls but, since BT runs what is by far the largest and most important network
—so far the only network—
and since its activities are so vital to the nation, its licence will need to be negotiated with particular care.
What does that mean? It implies that the British Telecom licence will be different from other operators' licences. The House would like to know why and how different regulations and controls should be placed upon British Telecom in the future.
What is happening now contradicts what the Secretary of State and his right hon. and hon. Friends have been saying. As my hon. Friend the Member for Blaydon pointed out, rates to domestic users have risen more than twice as fast as rates to commercial users. My right hon. Friend the Member for Oppenshaw said that Mercury was intent on creaming off the most profitable routes for communication, and, of course, British Telecom is being forced to respond and to put even more investment into those areas, to the detriment of other less well serviced areas.
I remind those hon. Members who say that the situation in the United States of America is somehow better, that the impact of network liberalisation there has not been minimal. It is causing concern about unresolved issues on pricing and the financing of the national communications infrastructure. There are real concerns about threats to existing services in the United States of America as a result of what has been happening there.
No one fought harder than A T and T to prevent the erosion of its monopoly position on the same argument that British Telecom has been using and that we are using now—that the threat to its less profitable services would not be containable if the highly profitable routes were taken from it.
The assurances of the Secretary of State carry little conviction. The threat to rural areas, including the Highlands and Islands, Devon and Cornwall, is well emphasised by the example in my constituency. Some of my constituents, living between two villages which already have telephone services, have been asked to pay £5,000 for a telephone. It is unbelieveable, but it has happened. The Secretary of State said that it has been going on for some time. That is not the point. How does he expect people in rural areas to afford a connection charge of that size? Is he happy that they should be given such a quotation? Does he believe that privatisation will improve that situation, or does he agree with us that it is bound to make the situation worse?
Are not the examples of the loss of rural buses, the loss of petrol stations in rural areas, and the threat of sub-post offices disappearing evidence of what is likely to happen to telephones in rural communities if privatisation and market forces prevail? If the Secretary of State does not believe that, he should understand that there are many people who do. The Post Office Users' National Council says that not only is that likely to happen, but that the consumers' case will fall, because of the conflict in the office of the Director General between the need to observe proper commercial competition and at the same time to look after consumer interests.
It says:
However, the Office of Telecommunications as proposed … is clearly intended to have far wider powers than those envisaged by POUNC including responsibility for all British Telecom matters including tariffs and consumer complaints.


POUNC does not consider that the regulatory body can effectively safeguard the consumer interest and the monopoly areas of the network whilst at the same time overseeing BT's move into a commercial environment where profits will be needed in order to attract investors.
Therefore, POUNC expresses grave concern.
It is not true that privatisation is likely to bring the advantages of new technologies to the rural areas and small towns and communities as quickly as would be likely to happen if British Telecom remained as a State public service. As my right hon. Friend the Member for Salford, West (Mr. Orme) said, it is not as though the track record of British Telecom is bad. In the decade 1971 to 1981, the number of subscribers doubled, with only a 6 per cent. increase in employment by the corporation. It has a major programme on digital systems. Today, more than 100,000 miles of advanced digital systems are working. In a few years, BT will add an extra 100,000 miles of digital systems every year at an annual estimated investment of £350 million in the foreseeable future. British Telecom seems to show litle concern about raising finance for new technology. It also has an agreement with an American organisation on satellite communications. It is a world leader in optical fibre technology. Even Lord Weinstock, commenting on cabling, which is important to British Telecom. said that the quick buck option would be bad for British industry and for the country as a whole, and it should be rejected. We agree with that.
British Telecom has a world lead in research based on its research establishment at Martlesham. We were told by a number of Conservative Members that, after privatisation, BT would raise more money by borrowing rather than by financing its investment out of retained profits, as it has done up to now. We are sick and tired of being told by the Prime Minister that we cannot finance our industries through borrowing, and that the reason why we cannot attack unemployment more aggressively and why investment has collapsed is that borrowing is bad for us. That is what we are told. We are given lessons about household economics. We are told to run inside our budget. That is exactly what BT has been doing for several years. Now, apparently, to suit the privatisation argument, running inside one's budget is out and borrowing is in. How two-faced can the Government be?
BT's buying policy has meant that 95 per cent. of its purchases have been made from the private sector of British industry, with an annual expenditure of about £2·2 billion. Will not that kind of business with the private sector be threatened by privatisation? Are not the commercial forces that will be let loose likely to mean that BT and others will go abroad for some of that business and place more and more of those contracts abroad? We already know that many contractors abroad are looking with great interest to see when their opportunity will come.
All the development of BT in the last few years has been done at no cost to the taxpayer. The reality is that if the proposals in the Bill go ahead BT will be left with a distorted business—with more of the loss-making business and less of the profitable lines, and with less income. That is likely to force it into a far less healthy financial state than it now enjoys.
My hon. Friend the Member for Newcastle-under-Lyme is right when he says that the policy set out in the Bill is bound to result in a threat to jobs and employment

in the industry. We do not need measures that w ill unsettle and destablise BT and lead to a major—perhaps a prolonged—period of uncertainty.
We are told that privatisation will come. We are not told when it will come—perhaps just after the next election. This is at a time when the people managing the industry face the challenges of the re-cabling of Britain and the need to introduce more and more new technology, optical fibres, more data transmission systems, and more international communications by satellite—a major investment programme by any international test. At a time when all those challenges face the corporation, we are told that it must now be privatised.
I listened with a wry smile to several Conservative Members saying that the major advances which have been taking place in BT, and building up for almost a decade, have resulted from the 1981 measure, taken through the House by a Conservative Government. What a load of nonsense. What absolute drivel. The challenges of the new technology and the opportunity for many managers, perhaps for the first time in their careers, to get to grips with new ideas and new challenges, have brought about those advances, and they have nothing whatever to do with the argument about privatisation.
Far from enhancing the performance of the management or the work force, the threat and uncertainty are likely to cause worry and to be de-motivating. That is the reality of the threat now hanging over the corporation. We would like to see BT as a flagship for information technology and telecommunications, instead of having massive uncertainty and further upheaval coming so soon after the 1981 Act.
The House should be in no doubt that a future Labour Government will act quickly to prevent organisations, such as Mercury, creaming off profitable business and damaging BT.
We want BT to maintain a national network and to be responsible to customers, whether they are the multimillion pound organisations in the City which want electronic exchanges or ordinary people in small towns or rural villages who simply want a telephone. A telephone in the home should not be dependent upon a person's ability to pay large and increasingly outrageous sums for connection. [HON. MEMBERS: "Ah!"] Conservative Members may say "Ah", but for the disabled, the chronically sick and the blind a telephone is a major part of their lives which broadens their existence and horizons.

Mr. Myles: rose——

Dr. Cunningham: No, I shall not give way.
For Conservative Members to respond as they do shows how little they care about many disadvantaged people in the community.
This massive Bill, selling off £15½ billion worth of public assets, at an as yet unspecified date, will reflect no credit on the Government. How can the Government believe that the quarter of a million people employed in the industry and its suppliers who are threatened by these proposals will think that the Bill is in their interests or the national interest? The present period of rapid change demands maximum performance from any manager. No manager in any industry would want to be confused and undermined in the way that the management—indeed, the whole work force—will be by the Bill.
The Bill begins with the creation of a massive quango—the Office of Telecommunications. No doubt a


person with considerable powers will be appointed, answerable only to the Secretary of State for Industry and not directly to the House, and set loose with tremendous powers over a major growth industry.
The Bill has 84 clauses providing new powers, controls and directions. It lists new criminal offences and describes those powers mentioned by my hon. Friend the Member for Keighley (Mr. Cryer) to intercept calls, tap telephones and pass information to other Governments. Then follow 87 pages of schedules. All that is done in the name of setting the industry free.
As ever with the Government, there is no attempt to define a clear stable strategy for the growth of the British telecommunications industry. The Bill, which we shall oppose, will serve only to confuse BT, its suppliers and users alike. It could well lead to large job losses within BT and its suppliers.
Even now, if we are to believe the newspapers, offers are being made—presumably behind the back of the Telecommunications Equipment Manufacturers Association—to let in the Japanese information technology industry. Yesterday, The Sunday Times, under the heading "Jenkin plans to woo Japan", said:
Industry Secretary Patrick Jenkin is planning his first trip to Japan next January in a move to speed up talks on collaboration between British and Japanese firms … But Miti also has an eye on the moves by the British Government to liberalise the United Kingdom telecommunications market by breaking up British Telecom's monopoly of supply".
It would be very interesting to learn what the constituent members of TEMA have to say about that.
This privatisation measure, like all those before it, has no place in a modern industrial society. It will further divide and disadvantage British industry and the British people. It deserves and will get our total opposition.

The Minister for Industry and Information Technology (Mr. Kenneth Baker): Tonight we have begun what will clearly be a long process of debate. [HON. MEMBERS: "It will be."] I note what Opposition Members say, but I found the suggestion of the Social Democratic Party spokesman, the hon. Member for Islington, Central (Mr. Grant), that there should be an agreed timetable for the Bill very attractive. [Interruption.] I just wanted Labour Members to confirm that they will not approach the Bill in such a constructive way.
Several questions have been raised and I shall deal with as many as possible. The right hon. Member for Salford, West (Mr. Orme), and the hon. Members for Newcastle-under-Lyme (Mr. Golding) and for Blaydon (Mr. McWilliam) raised points about the pensions of BT's existing pensioners and the pension entitlements of BT's existing employees. I appreciate that there is considerable anxiety, and I should like to set some of it at rest. As regards the existing pensioners, the trustees of the Post Office and BT pension funds have the duty of providing pensions to BT and Post Office pensioners and of holding in trust the contributions paid by BT, the Post Office and past and present employees.
The benefits paid to pensioners are governed by the pension fund trust deed. Under rules established by that deed, BT's pensioners are entitled to periodic increases in their pensions in line with the increases enjoyed by most civil servants. The trust deed prohibits changes which

would reduce the benefits of any pensioner below the entitlements for Civil Service pensioners. Therefore, it would not be open to the successor company, even if it wished, to reduce that entitlement.

Mr. Charles R. Morris: Is the Minister aware that British Airways' employees were given a similar undertaking by the Government at that time?

Mr. Baker: I assure the right hon. Gentleman that I have given the correct legal position for BT's existing pensioners.
I come to the pension rights of BT's employees who are not drawing a pension at present. BT's current employees are members of the pension scheme, by virtue of their contracts of employment. Any change to the rules in relation to employees retiring in future would require the agreement of all the trustees—I stress that-including those nominated by BT's trade unions, and all the trustees are required by law to act in the best interests of the trust's beneficiaries.
Therefore, although I cannot offer any guarantees about the future—any more than I could if BT were to remain a nationalised industry—I can assure the House that there is substantial protection for BT's employees under the trust arrangements. That protection will be preserved in full when BT is turned into a public limited company. I hope that those clear undertakings will set aside the anxiety and unrest that have been expressed. As regards new recruits to BT, I cannot bind the future pensions policy of BT, whether it is a public limited company or a nationalised industry. The pensions policy of BT plc in future in relation to new recruits must be a matter for it to determine in consultation with its work force.
Questions have been raised about the pension fund deficiency. There are two deficiencies: the post-1969 deficiency, which is being met partly by BT and partly by the Post Office, and the pre-1969 deficiency. As matters stand, BT is under an obligation to make good the pre-1969 deficiency by 1992 by means of payments under a deed of covenant. As my right hon. Friend the Secretary of State said, under the legislation that obligation is to be handed on to the successor company, BT plc. As my right hon. Friend also said, it might be possible to reduce the burden on BT plc by arranging for part at least of that deficiency to be liquidated out of proceeds from a sale of shares. I can offer no commitment, but clearly that is one of the options. I wish to make it clear that that obligation will be met, and the Bill ensures that it will be.
The right hon. Member for Salford, West asked me a specific question about clause 38. He said that the clause could possibly eliminate the right of British Telecom employees to strike. Clause 38 does nothing to remove or alter the right of anyone employed by British Telecom to strike. During the Committee stage of the British Telecommunications Bill—now the British Telecommunications Act—on 3 March 1981 my right hon. and learned Friend the Attorney-General advised that under the existing law a total withdrawal of labour would not be an offence, although other forms of industrial action might be.
The existing law is contained in three Acts, the relevant sections of which are being repealed and replaced by the Bill. The Bill merely seeks to update those provisions without affecting the right to strike. I can clarify that point further in Committee if the right hon. Gentleman wishes.

Mr. Orme: Will the Attorney-General attend the Committee to give clarification on this issue?

Mr. Baker: The Law Officers are always at the service of the House. If the right hon. Gentleman wants confirmation that the Law Officers will attend, I shall convey that matter to my right hon. and learned Friend. He appeared during the Committee stage of the British Telecommunications Bill and on Report. If the right hon. Gentleman requires that, I shall let my right hon. and learned Friend know.
My hon. Friends the Members for Hertfordshire, South-West (Mr. Page) and for Cornwall, North (Mr. Neale) asked about British Telecom's international obligations when it becomes a public limited company. I should like to make the position clear. British Telecom has hitherto taken the leading role in representing British interests internationally at the technical and operating level. The passage of the Bill, the sale of shares and the issue of the British Telecom licence will put British Telecom on the same basis as other telecommunications operators. The other operators will have a legitimate interest in our international agreements. I emphasise that in this role British Telecom acts as an agent of Her Majesty's Government. We are considering carefully the implications of the change in the status of British Telecom, of the progress already made in liberalisation and whether the Government should take a more active role in representation in the future.
Several hon. Members, including the hon. Member for Whitehaven (Dr. Cunningham), and the right hon. Member for Salford, West, said that one of the dangers of the Bill is that a liberalised, and now a privatised, British Telecom would start buying goods and equipment on a massive scale from overseas suppliers. One must first appreciate that at present 95 per cent. of all purchases come from British sources, and I can see no reason why that should suddenly change.
British Telecom naturally looks to United Kingdom suppliers, because it is advantageous for the operator and the supplier to be close geographically. It is up to British companies to respond to that challenge. One of the consequences of the liberalisation measures that we have taken through the House with the British Telecommunications Act has been a vigorous response by many British manufacturers. Opposition Members must appreciate that we were faced with a sharply declining share of world markets for British telecommunications manufacturers.
In 1950 we had 25 per cent. of the world market, and we now have less than 5 per cent. The arrangements that brought about that massive decline are the ones that we decided should be changed. As a result, I am glad to say that British companies are beginning to obtain significant orders in overseas markets. GEC is selling business exchanges to New Zealand and in the Far East. Plessey is selling business exchanges in Europe, and there will be more opportunities for that. So I deny completely that liberalisation is an importers' charter, as some hon. Members have claimed.

Mr. Charles R. Morris: Will the Minister accept the point that I made, which was that following the liberalisation of the manufacture and approval of telephone equipment, of 96 telephone handsets submitted for approval, 94 were not made in Britain?

Mr. Baker: The right hon. Gentleman reinforces my argument. History led us to the point where our manufacturers were not stimulated to produce a wide range of equipment. I am glad to say that we were able to give approval to three telexes and teleprinters in July of this year, all of which were made in Britain. My right hon. Friend has been chided for going to Japan with a view to establishing co-operative ventures. As my hon. Friend the Member for Brighouse and Spenborough (Mr. Waller) said, there is nothing wrong with joint ventures when they involve manufacturing in Britain.
I remind Labour Members that as a direct result of our liberalisation policy the Canadian company, Mitel, is building a factory in Gwent. An American company, GTE, is linking with Ferranti. That will lead to more equipment being made in Manchester. Motorola, an American company, has already announced a substantial expansion to its factory at Basingstoke in anticipation of the liberalisation of the radio telephone market. Redifon and NEC—NEC is a Japanese company—are making pageing equipment in Britain. Fujitsu will tie up with EMI on disc drives. ICL is tying up with Fujitsu to help make larger computers in this country. What is wrong with all of that? All these developments will produce more jobs, more wealth and more prosperity.
Many hon. Members expressed concern about services in rural areas. The hon. Member for Truro (Mr. Penhaligon), the Liberal Party's spokesman, my hon. Friends the Members for Cornwall, North, for Brighouse and Spenborough and for Banff (Mr. Myles), and the hon. Member for Whitehaven, all expressed anxiety on this score. I shall try to set some of these anxieties at rest. The continued provision of services to rural areas will be guaranteed by the obligation under British Telecom's licence to provide services throughout the United Kingdom subject to its being reasonably practicable to do so.
Whenever "reasonably practicable to do so" is uttered, there is a sigh from Labour Members. The phrase comes from existing legislation and we shall improve upon that legislation in two respects. At present it is up to BT alone to decide whether the provision of services across the country is reasonably practicable. That is BT's decision. Under the Bill, the Secretary of State and the Director General of Oftel have to be involved. That is an improvement.
In clause 3(1)(a) there is, for the first time in our statute law, an obligation to take into account
the need to secure … throughout the United Kingdom … such telecommunication services as satisfy all reasonable demands for them including, in particular, public call box services, emergency services and services in rural areas
That is a clear guarantee that the services will be provided.

Mr. Penhaligon: I ask the Minister to answer the question that I posed three and a half hours ago. If there is a storm in a rural area and an individual telephone line is put out of action and the repair bill is £1,100, £1,200, £1,500 or £2,000, who will pay it? Who will pay for the repair to a single telephone line on isolated property?

Mr. Baker: The maintenance of the network and the making of repairs of that sort will remain with the network provider, which will be BT.

Mr. Penhaligon: What sort of guarantee is that"

Mr. Baker: It is clear that under the Bill there is a more specific and fuller obligation than has ever appeared in legislation before to provide the services that I have described.
I deal now with connection charges. The hon. Member for Whitehaven (Dr. Cunningham) made great play of the fact that a fee of £5,000 has been quoted to one of his constituents. I asked that inquiries should be made about that case. I understand that the constituent to whom he referred is an ex-university lecturer who lives on the top of a fell in Cumbria. Originally he did not want a telephone, but when his wife became pregnant he went to the local office to inquire about the installation cost. He has not submitted a formal application, but never mind. He was quoted the figure for 100 hours at the flat rate, because BT quotes that figure. That has been the arrangement for some time. It has not changed recently. There was another estimated 200 hours of extra work at commercial rates, because apparently the area in which the hon. Gentleman's constituent lives is one of great natural beauty and the lines would have to go underground.
Either the hon. Gentleman or I can take up the matter with BT. I gather that there has been no response from his constituent or a formal application. However, the point is that that is the present arrangement. Such arrangements have been operating since BT has been a nationalised operation.

Dr. John Cunningham: The Minister said in answer to the hon. Member for Truro (Mr. Penhaligon) that in remote areas costs arising from storm damage or damage by bulls, or whatever the hon. Member for Banff (Mr. Myles) keeps near his telephones lines, must be met by BT. However, the measures are likely to reduce BT's income and it will end up with a higher percentage of that kind of financial responsibility than organisations such as Mercury. People in rural areas such as a national park will not be able to afford the economic costs for a telephone to be installed.

Mr. Baker: That is no different from the present position. The example that the hon. Gentleman quoted exists now. The management of BT decides on such matters every day. Both the hon. Gentleman and I can take up the case and see whether the quotation is fair.
I refer next to the other costs for people living in rural areas. BT does not account separately for rural services within its accounting system, but it has a large rural network. It is not in BT's interest to withdraw from running that network. It wants to capitalise on that network. It has invested in it and it wants to stimulate businesss. It will not do so by jacking up the prices on the rural network. That is not the intention of BT.
The movements in modern technology—microwave, satellite, small dish services and cellular radio—will reduce radically the price of telecommunications in remote areas over the next decade. That is what my hon. Friend the Member for Banff, with his earthy common sense, said so clearly. I am sure that BT will not want to lose that opportunity. That is why the BT board has accepted its role of maintaining services in the rural areas and the emergency services without demanding special subsidies.
Some points were made about BT's licence. The draft licence will be made available to the Committee. We are still discussing it with BT. It has not asked us to make it

openly available, but it will be made available in plenty of time for the Committee. I appreciate and accept that it will be an important document in the Committee debates.
I was asked about the duration of the licence. That is being discussed with BT. I have been asked whether it will be published. It will be a public document. There will be a register of licences granted under the Bill. I make it clear that it is not the Government's intention to issue licences for more national networks in the foreseeable future. The existing ones—BT, Hull and Mercury—will suffice.

Mr. Charles R. Morris: Will the Minister give way?

Mr. Baker: Not again. Not to the right hon. Gentleman.
Other licences will be issued. There is a competition at the moment for mobile radio telephones. The successful consortia in that competition will need licences. Some anxiety has been expressed about the level of fees. They are being set at a low level just to cover the issuing, monitoring and amending of licences.
I deal next with the Office of Telecommunications. We have been accused of setting up a quango and a huge bureaucracy. We envisage that a staff of about 50 will suffice for Oftel's works. I am aware that the argument that we do not need that body is being put about. BT is doing that. It is doing a great deal of lobbying.
I suggest that those who discuss the matter with BT on a pleasant occasion when they are having their minds teased or their palates tickled will appreciate that BT is making a special case. They must appreciate that even after liberalisation and privatisation about 90 to 95 per cent. of the telecommunications network in Britain will be conducted by BT.
With that level of market dominance, it is right that the market should be regulated, and it must be regulated much more effectively than it is now. It is not acceptable to set up either a public body or a private company—which is what BT plc will be—which has such market dominance, without regulation. That is the basic and substantial reason for having Oftel.
BT is privileged. It has the right to grant licences or not to grant them to its competitors. It does everything. It is the policeman, the prosecutor, the judge, the jury, the prison officer and the executioner. That is why we receive complaints from many companies saying that BT has far too much power. We are removing those powers under the Bill. Oftel's functions will be to police all licences, to ensure that there is no undue influence, to police practices, to ensure that BT does not abuse its circumstances to push its own equipment rather than that of its competitors and similar matters.
Oftel is not a licensing authority. The Secretary of State will retain the power to license. It will not, therefore, grow into a body such as the American FCC. It will regulate and control competition. That role is needed. BT will not operate in too restricted an area. I utterly refute the argument that it will. The conditions will be known in the licence. That is what Oftel will have to promote.
One area of activity that has hardly been mentioned today is the Bill's significant improvement of the circumstances of consumers. POUNC has an advisory role. Its duties will be taken over by a statutory body—Oftel—that will have teeth. Oftel will ensure that licence obligations are implemented. That is a firm safeguard. It will take over POUNC's functions of


agreeing performance targets with BT. It will deal with all customer complaints about BT, Mercury and Hull. We are introducing the right of the telephone holder to sue BT for non-performance. We have often been asked to do that.

Mr. Charles R. Morris: Will the hon. Gentleman give way?

Mr. Baker: Everything will be equal in that respect.

Mr. Morris: Which system will the Government use?

Mr. Baker: I shall now deal with telephone bills and how the consumer will be affected. We expect BT and other operators to introduce new metering systems and to itemise bills as technology allows. In Committee I shall introduce proposals for independent checking of design and metering systems of BT's operators. That will lead the way to the possibility of itemised bills. That is one of the matters about which my Department has received a tremendous amount of correspondence in the past few years.
I emphasise that we do not intend to offer shares for sale until after the next general election, but we will set up Oftel when the Bill has received Royal Assent.
I should like to examine the views of the various Opposition parties. I had always believed that the Liberal Party stood for freedom and choice, and particularly for wider share ownership and employee participation. Indeed, I looked up the Liberal Party's manifesto to refresh my memory and to make sure that it stood for wider share ownership and employee participation. It is no good the Liberal Party's spokesman saying that he and his colleagues believe in those things. They have the chance to vote for both and they intend to vote against both. So wide is the Liberal's definition of wider share ownership that it comes down to one share owned by the State.

Mr. Charles R. Morris: Get back to the Bill.

Mr. Baker: I eventually teased out of the hon. Member for Islington, Central (Mr. Grant) the policy of the SDP. Roughly speaking, it is that the SDP would abandon Treasury orthodoxy and allow BT to go to the market and to take its investment out of the PSBR. It would strike the shackles off.
I would have found it acceptable if the Liberals had put forward that view, because they have not had to defend Treasury orthodoxy for the past 66 years. It is that long since they had a Chancellor of the Exchequer at No. 11 Downing Street. However, that is not the case with the hon. Member for Islington, Central. Three and a half years ago he was sitting on the Government Front Bench, which is called the Treasury Bench, defending Treasury orthodxy. There has been a complete reversal and change of policy. I do not know at what stage on the road to Damascus the light flashed in the eyes of the hon. Member for Islington, Central, but I suspect that he changed his view not because he thought that his ideas were better, but because he could not stand his former colleagues and they could not stand him.

Mr. Charles R. Morris: Get back to the Bill.

Mr. Speaker: Order. The right hon. Member for Manchester, Openshaw (Mr. Morris) must not keep shouting from a sedentary position. It is enough to put anyone off.

Mr. Morris: On a point of order, Mr. Speaker. I accept your rebuke, but when I sought to intervene the Minister refused to give way.

Mr. Baker: This has been a happy day for the Labour Party, because the Bill is an issue on which it could unite. The militants and the moderates could come together and vote against the Bill, because it is the biggest measure of denationalisation ever brought before this or any other Parliament. The issue is stark. Black is black and white is white. It is so stark that even the right hon. Member for Salford, West (Mr. Orme) got it right. I congratulate the right hon. Gentleman and his Front-Bench colleagues on being reappointed as the Shadow industry team. I have some sympathy with the Leader of the Opposition when he has to shuffle the shadows.
The Labour Party has time and again said that BT would be safe in a Labour Government's hands. But when a Labour Government were responsible for it, they cut investment—in 1976, 1977 and 1978. What reason has anyone to believe that if a Labour Government were responsible for BT and it were still a nationalised industry it would be able to go the market and be free from Treasury control? That is not the case.
The Bill provides the possibility of BT going to the market. We want BT to have the complete freedom that a private company has. Only in this way can the needs of the country and of British Telecom be met.
The Bill creates freedom from Treaury and ministerial control. It also given freedom to BT to grow, to operate overseas and to make acquisitions. The Bill is necessary because the market is growing so quickly that BT can expand only by becoming a free, independent company. I commend the Bill to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 281, Noes 237.

Division No. 20]
[10 pm


AYES


Adley, Robert
Browne, John (Winchester)


Aitken, Jonathan
Bruce-Gardyne, John


Alexander, Richard
Bryan, Sir Paul


Alison, Rt Hon Michael
Buchanan-Smith, Rt. Hon. A.


Amery, Rt Hon Julian
Buck, Antony


Ancram, Michael
Budgen, Nick


Arnold, Tom
Bulmer, Esmond


Aspinwall, Jack
Burden, Sir Frederick


Atkins, Rt Hon H.(S'thorne)
Butcher, John


Atkins, Robert(Preston N)
Carlisle, John (Luton West)


Baker, Kenneth(St. M'bone)
Carlisle, Kenneth (Lincoln)


Baker, Nicholas (N Dorset)
Channon, Rt. Hon. Paul


Beaumont-Dark, Anthony
Chapman, Sydney


Bendall, Vivian
Churchill, W. S.


Benyon, Thomas (A'don)
Clark, Hon A. (Plym'th, S'n)


Benyon, W. (Buckingham)
Clark, Sir W. (Croydon S)


Best, Keith
Clarke, Kenneth (Rushcliffe)


Bevan, David Gilroy
Clegg, Sir Walter


Biffen, Rt Hon John
Colvin, Michael


Biggs-Davison, Sir John
Cope, John


Blackburn, John
Cormack, Patrick


Blaker, Peter
Corrie, John


Body, Richard
Costain, Sir Albert


Bonsor, Sir Nicholas
Cranborne, Viscount


Bottomley, Peter (W'wich W)
Critchley, Julian


Boyson, Dr Rhodes
Crouch, David


Braine, Sir Bernard
Dickens, Geoffrey


Bright, Graham
du Cann, Rt Hon Edward


Brinton, Tim
Dunn, Robert (Dartford)


Brittan, Rt. Hon. Leon
Dykes, Hugh


Brooke, Hon Peter
Eden, Rt Hon Sir John


Brotherton, Michael
Edwards, Rt Hon N. (P'broke)


Brown, Michael(Brigg &amp; Sc'n)
Eggar, Tim






Elliott, Sir William
Luce, Richard


Emery, Sir Peter
Lyell, Nicholas


Eyre, Reginald
McCrindle, Robert


Fairbairn, Nicholas
Macfarlane, Neil


Faith, Mrs Sheila
MacGregor, John


Farr, John
MacKay, John (Argyll)


Fenner, Mrs Peggy
Macmillan, Rt Hon M.


Finsberg, Geoffrey
McNair-Wilson, M. (N'bury)


Fisher, Sir Nigel
McNair-Wilson, P. (New F'st)


Fletcher, A. (Ed'nb'gh N)
Madel, David


Fletcher-Cooke, Sir Charles
Major, John


Fookes, Miss Janet
Marland, Paul


Forman, Nigel
Marlow, Antony


Fowler, Rt Hon Norman
Marten, Rt Hon Neil


Fox, Marcus
Mates, Michael


Fraser, Rt Hon Sir Hugh
Mather, Carol


Fraser, Peter (South Angus)
Mawby, Ray


Gardiner, George (Reigate)
Mawhinney, Dr Brian


Gardner, Edward (S Fylde)
Maxwell-Hyslop, Robin


Garel-Jones, Tristan
Mayhew, Patrick


Gilmour, Rt Hon Sir Ian
Mellor, David


Glyn, Dr Alan
Meyer, Sir Anthony


Goodhart, Sir Philip
Miller, Hal (B'grove)


Goodhew, Sir Victor
Mills, Iain (Meriden)


Gorst, John
Mills, Sir Peter (West Devon)


Gow, Ian
Miscampbell, Norman


Gower, Sir Raymond
Moate, Roger


Gray, Hamish
Monro, Sir Hector


Greenway, Harry
Montgomery, Fergus


Griffiths, E.(B'y St. Edm'ds)
Morgan, Geraint


Griffiths, Peter Portsm'th N)
Morris, M. (N'hampton S)


Grist, Ian
Morrison, Hon C. (Devizes)


Grylls, Michael
Morrison, Hon P. (Chester)


Gummer, John Selwyn
Murphy, Christopher


Hamilton, Hon A.
Myles, David


Hamilton, Michael (Salisbury)
Neale, Gerrard


Hampson, Dr Keith
Needham, Richard


Hannam, John
Nelson, Anthony


Haselhurst, Alan
Neubert, Michael


Hastings, Stephen
Newton, Tony


Havers, Rt Hon Sir Michael
Onslow, Cranley


Hawksley, Warren
Oppenheim, Rt Hon Mrs S.


Hayhoe, Barney
Page, Richard (SW Herts)


Heddle, John
Parkinson, Rt Hon Cecil


Henderson, Barry
Parris, Matthew


Heseltine, Rt Hon Michael
Patten, Christopher (Bath)


Hicks, Robert
Patten, John (Oxford)


Higgins, Rt Hon Terence L.
Pattie, Geoffrey


Hogg, Hon Douglas (Gr'th'm)
Pawsey, James


Holland, Philip (Carlton)
Percival, Sir Ian


Hooson, Tom
Peyton, Rt Hon John


Hordern, Peter
Pink, R. Bonner


Howe, Rt Hon Sir Geoffrey
Pollock, Alexander


Howell, Rt Hon D. (G'Idf'd)
Prentice, Rt Hon Reg


Hunt, David (Wirral)
Price, Sir David (Eastleigh)


Hunt, John (Ravensbourne)
Proctor, K. Harvey


Hurd, Rt Hon Douglas
Pym, Rt Hon Francis


Irvine, Rt Hon Bryant Godman
Raison, Rt Hon Timothy


Irving, Charles (Cheltenham)
Rathbone, Tim


Jenkin, Rt Hon Patrick
Rees, Peter (Dover and Deal)


Johnson Smith, Sir Geoffrey
Rees-Davies, W. R.


Jopling, Rt Hon Michael
Renton, Tim


Joseph, Rt Hon Sir Keith
Rhodes James, Robert


Kaberry, Sir Donald
Rhys Williams, Sir Brandon


Kellett-Bowman, Mrs Elaine
Ridley, Hon Nicholas


Kimball, Sir Marcus
Ridsdale, Sir Julian


King, Rt Hon Tom
Roberts, M. (Cardiff NW)


Kitson, Sir Timothy
Roberts, Wyn (Conway)


Knox, David
Rossi, Hugh


Lamont, Norman
Rost, Peter


Lang, Ian
Royle, Sir Anthony


Langford-Holt, Sir John
Rumbold, Mrs A. C. R.


Latham, Michael
Sainsbury, Hon Timothy


Lawrence, Ivan
St. John-Steves, Rt Hon N.


Lee, John
Scott, Nicholas


Le Marchant, Spencer
Shaw, Giles (Pudsey)


Lennox-Boyd, Hon Mark
Shaw, Sir Michael (Scarb')


Lewis, Kenneth (Rutland)
Shelton, William (Streatham)


Lloyd, Ian (Havant &amp; W'loo)
Shepherd, Colin (Hereford)


Lloyd, Peter (Fareham)
Shepherd, Richard





Shersby, Michael
Trotter, Neville


Silvester, Fred
Van Straubenzee, Sir W.


Sims, Roger
Vaughan, Dr Gerard


Skeet, T. H. H.
Viggers, Peter


Smith, Tim (Beaconsfield)
Waddington, David


Speller, Tony
Wakeham, John


Spence, John
Waldegrave, Hon William


Spicer, Jim (West Dorset)
Walker, Rt Hon P. (W'cester)


Spicer, Michael (S Worcs)
Walker, B. (Perth)


Sproat, Iain
Walker-Smith, Rt Hon Sir D.


Squire, Robin
Wall, Sir Patrick


Stanbrook, Ivor
Waller, Gary


Stanley, John
Walter, Dennis


Steen, Anthony
Ward, John


Stevens, Martin
Warren, Kenneth


Stewart, A.(E Renfrewshire)
Watson, John


Stewart, Ian (Hitchin)
Wells, Bowen


Stokes, John
Wells, John (Maidstone)


Stradling Thomas, J.
Wheeler, John


Tapsell, Peter
Whitelaw, Rt Hon William


Taylor, Teddy (S'end E)
Whitney, Raymond


Tebbit, Rt Hon Norman
Williams, D. (Montgomery)


Temple-Morris, Peter
Winterton, Nicholas


Thatcher, Rt Hon Mrs M.
Wolfson, Mark


Thompson, Donald
Young, Sir George (Acton)


Thorne, Neil (Ilford South)



Thornton, Malcolm
Tellers for the Ayes:


Townend, John (Bridlington)
Mr. Robert Boscawen and


Townsend, Cyril D, (B'heath)
Mr. Anthony Berry.


Trippier, David





NOES


Abse, Leo
Dormand, Jack


Allaun, Frank
Dubs, Alfred


Alton, David
Duffy, A. E. P.


Anderson, Donald
Dunnett, Jack


Archer, Rt Hon Peter
Dunwoody, Hon Mrs G.


Ashley, Rt Hon Jack
Eadie, Alex


Ashton, Joe
Ellis, R. (NE D'bysh're)


Atkinson, N.(H'gey,)
Ellis, Tom (Wrexham)


Barnett, Guy (Greenwich)
English, Michael


Barnett, Rt Hon Joel (H'wd)
Ennals, Rt Hon David


Beith, A. J.
Evans, Ioan (Aberdare)


Benn, Rt Hon Tony
Evans, John (Newton)


Bennett, Andrew(St'kp't N)
Ewing, Harry


Booth, Rt Hon Albert
Field, Frank


Bottomley, Rt Hon A.(M'b'ro)
Fitch, Alan


Bray, Dr Jeremy
Fitt, Gerard


Brocklebank-Fowler, C.
Flannery, Martin


Brown, R. C. (N'castle W)
Foot, Rt Hon Michael


Brown, Ron (E'burgh, Leith)
Ford, Ben


Buchan, Norman
Foster, Derek


Callaghan, Rt Hon J.
Foulkes, George


Callaghan, Jim (Midd't'n &amp; P)
Fraser, J. (Lamb'th, N'w'd)


Campbell, Ian
Freeson, Rt Hon Reginald


Campbell-Savours, Dale
Freud, Clement


Canavan, Dennis
Garrett, John (Norwich S)


Cant, R. B.
George, Bruce


Carter-Jones, Lewis
Gilbert, Rt Hon Dr John


Cartwright, John
Ginsburg, David


Clark, Dr David (S Shields)
Golding, John


Cocks, Rt Hon M. (B'stol S)
Graham, Ted


Cohen, Stanley
Grant, John (Islington C)


Concannon, Rt Hon J. D.
Grimond, Rt Hon J.


Conlan, Bernard
Hamilton, James (Bothwell)


Cook, Robin F.
Hamilton, W. W. (C'tral Fife)


Craigen, J. M. (G'gow, M'hill)
Harman, Harriet (Peckham)


Crawshaw, Richard
Harrison, Rt Hon Walter


Crowther, Stan
Hart, Rt Hon Dame Judith


Cryer, Bob
Hattersley, Rt Hon Roy


Cunningham, G. (Islington S)
Healey, Rt Hon Denis


Cunningham, Dr J. (W'h'n)
Heffer, Eric S.


Dalyell, Tam
Hogg, N. (E Dunb't'nshire)


Davies, Rt Hon Denzil (L'lli)
Holland, S. (L'b'th, Vauxh'll)


Davis, Terry (B'ham, Stechf'd)
Home Robertson, John


Deakins, Eric
Homewood, William


Dean, Joseph (Leeds West)
Horam, John


Dewar, Donald
Howell, Rt Hon D.


Dixon, Donald
Howells, Geraint


Dobson, Frank
Hoyle, Douglas






Huckfield, Les
Roberts, Allan (Bootle)


Hudson Davies, Gwilym E.
Roberts, Ernest (Hackney N)


Hughes, Mark (Durham)
Roberts, Gwilym (Cannock)


Hughes, Robert (Aberdeen N)
Robertson, George


Hughes, Roy (Newport)
Robinson, G. (Coventry NW)


Janner, Hon Greville
Rodgers, Rt Hon William


Jay, Rt Hon Douglas
Rooker, J. W.


John, Brynmor
Roper, John


Johnson, James (Hull West)
Ross, Ernest (Dundee West)


Johnson, Walter (Derby S)
Ross, Stephen (Isle of Wight)


Johnston, Russell (Inverness)
Rowlands, Ted


Jones, Rt Hon Alec (Rh'dda)
Ryman, John


Jones, Barry (East Flint)
Sandelson, Neville


Jones, Dan (Burnley)
Sever, John


Kaufman, Rt Hon Gerald
Sheerman, Barry


Kerr, Russell
Sheldon, Rt Hon R.


Kilroy-Silk, Robert
Shore, Rt Hon Peter


Lamond, James
Short, Mrs Renée


Leadbitter, Ted
Silkin, Rt Hon J. (Deptford)


Leighton, Ronald
Silkin, Rt Hon S. C. (Dulwich)


Lestor, Miss Joan
Silverman, Julius


Lewis, Arthur (N'ham NW)
Skinner, Dennis


Lewis, Ron (Carlisle)
Smith, Cyril (Rochdale)


Litherland, Robert
Snape, Peter


Lofthouse, Geoffrey
Soley, Clive


Lyons, Edward (Bradf'd W)
Speller, John Francis (B'ham)


Mabon, Rt Hon Dr J. Dickson
Spriggs, Leslie


McCartney, Hugh
Stallard, A. W.


McDonald, Dr Oonagh
Steel, Rt Hon David


McKay, Allen (Penistone)
Stewart, Rt Hon D. (W Isles)


McKelvey, William
Stoddart, David


MacKenzie, Rt Hon Gregor
Stott, Roger


Maclennan, Robert
Strang, Gavin


McMahon, Andrew
Straw, Jack


McNamara, Kevin
Summerskill, Hon Dr Shirley


McTaggart, Robert
Taylor, Mrs Ann (Bolton W)


McWilliam, John
Thomas, Dafydd (Merioneth)


Marks, Kenneth
Thomas, Jeffrey (Abertillery)


Marshall, D(G'gow S'ton)
Thomas, Mike (Newcastle E)


Marshall, Dr Edmund (Goole)
Thomas, Dr R.(Carmarthen)


Marshall, Jim (Leicester S)
Thorne, Stan (Preston South)


Mason, Rt Hon Roy
Tilley, John


Maxton, John
Tinn, James


Maynard, Miss Joan
Torney, Tom


Meacher, Michael
Varley, Rt Hon Eric G.


Mikardo, Ian
Wainwright, E.(Dearne V)


Mitchell, Austin (Grimsby)
Wainwright, R.(Colne V)


Mitchell, R. C. (Soton Itchen)
Walker, Rt Hon H.(D'caster)


Morris, Rt Hon C. (O'shaw)
Wardell, Gareth


Morton, George
Watkins, David


Moyle, Rt Hon Roland
Weetch, Ken


Newens, Stanley
Wellbeloved, James


Oakes, Rt Hon Gordon
Welsh, Michael


Ogden, Eric
White, Frank R.


O'Halloran, Michael
Whitehead, Phillip


O'Neill, Martin
Whitlock, William


Orme, Rt Hon Stanley
Wigley, Dafydd


Owen, Rt Hon Dr David
Willey, Rt Hon Frederick


Palmer, Arthur
Williams, Rt Hon A.(S'sea W)


Park, George
Wilson, Gordon (Dundee E)


Parker, John
Wilson, Rt Hon Sir H.(H'ton)


Parry, Robert
Wilson, William (C'try SE)


Pendry, Tom
Winnick, David


Penhaligon, David
Woodall, Alec


Pitt, William Henry
Woolmer, Kenneth


Powell, Raymond (Ogmore)
Wrigglesworth, Ian


Prescott, John
Wright, Sheila


Price, C. (Lewisham W)
Young, David (Bolton E)


Race, Reg



Radice, Giles
Tellers for the Noes:


Rees, Rt Hon M (Leeds S)
Mr. Frank Haynes and


Richardson, Jo
Mr. Lawrence Cunliffe.


Roberts, Albert (Normanton)

Question accordingly agreed to.

Bill read a Second time.

Motion made—[Mr. Harrison]—and Question put, That the Bill be committed to a Committee of the whole House:——

The House proceeded to a Division:

Mr. Speaker: Hon. Members must not stand this side of the Bar of the House.

The House having divided: Ayes 199, Noes 312.

Division No. 21]
[10.15 pm


AYES


Abse, Leo
Hart, Rt Hon Dame Judith


Allaun, Frank
Hattersley, Rt Hon Roy


Anderson, Donald
Haynes, Frank


Archer, Rt Hon Peter
Healey, Rt Hon Denis


Ashley, Rt Hon Jack
Heffer, Eric S.


Ashton, Joe
Hogg, N. (E Dunb't'nshire)


Atkinson, N.(H'gey,)
Holland, S. (L'b'th, Vauxh'll)


Barnett, Guy (Greenwich)
Home Robertson, John


Barnett, Rt Hon Joel (H'wd)
Homewood, William


Benn, Rt Hon Tony
Howell, Rt Hon D.


Bennett, Andrew(St'kp't N)
Hoyle, Douglas


Booth, Rt Hon Albert
Huckfield, Les


Bray, Dr Jeremy
Hughes, Mark (Durham)


Brown, R. C. (N'castle W)
Hughes, Robert (Aberdeen N)


Brown, Ron (E'burgh, Leith)
Hughes, Roy (Newport)


Buchan, Norman
Janner, Hon Greville


Callaghan, Rt Hon J.
Jay, Rt Hon Douglas


Callaghan, Jim (Midd't'n &amp; P)
John, Brynmor


Campbell, Ian
Johnson, James (Hull West)


Campbell-Savours, Dale
Johnson, Walter (Derby S)


Canavan, Dennis
Jones, Rt Hon Alec (Rh'dda)


Cant, R. B.
Jones, Barry (East Flint)


Carter-Jones, Lewis
Jones, Dan (Burnley)


Clark, Dr David (S Shields)
Kaufman, Rt Hon Gerald


Cocks, Rt Hon M. (B'stol S)
Kerr, Russell


Cohen, Stanley
Kilroy-Silk, Robert


Concannon, Rt Hon J. D.
Lamond, James


Conlan, Bernard
Leadbitter, Ted


Cook, Robin F.
Leighton, Ronald


Craigen, J. M. (G'gow, M'hill)
Lestor, Miss Joan


Crowther, Stan
Lewis, Arthur (N'ham NW)


Cryer, Bob
Lewis, Ron (Carlisle)


Cunliffe, Lawrence
Litherland, Robert


Cunningham, Dr J. (W'h'n)
Lofthouse, Geoffrey


Dalyell, Tam
McCartney, Hugh


Davies, Rt Hon Denzil (L'lli)
McDonald, Dr Oonagh


Davis, Terry (B'ham, Stechf'd)
McKay, Allen (Penistone)


Deakins, Eric
McKelvey, William


Dean, Joseph (Leeds West)
MacKenzie, Rt Hon Gregor


Dewar, Donald
McMahon, Andrew


Dixon, Donald
McNamara, Kevin


Dobson, Frank
McTaggart, Robert


Dormand, Jack
McWilliam, John


Dubs, Alfred
Marks, Kenneth


Duffy, A. E. P.
Marshall, D(G'gow S'ton)


Dunnett, Jack
Marshall, Dr Edmund (Goole)


Dunwoody, Hon Mrs G.
Marshall, Jim (Leicester S)


Eadie, Alex
Mason, Rt Hon Roy


Ellis, R. (NE D'bysh're)
Maxton, John


English, Michael
Maynard, Miss Joan


Ennals, Rt Hon David
Meacher, Michael


Evans, Ioan (Aberdare)
Mikardo, Ian


Evans, John (Newton)
Mitchell, Austin (Grimsby)


Ewing, Harry
Morris, Rt Hon C. (O'shaw)


Field, Frank
Moyle, Rt Hon Roland


Fitch, Alan
Newens, Stanley


Fitt, Gerard
Oakes, Rt Hon Gordon


Flannery, Martin
O'Neill, Martin


Foot, Rt Hon Michael
Orme, Rt Hon Stanley


Ford, Ben
Palmer, Arthur


Foulkes, George
Park, George


Fraser, J. (Lamb'th, N'w'd)
Parker, John


Freeson, Rt Hon Reginald
Parry, Robert


Garrett, John (Norwich S)
Pendry, Tom


George, Bruce
Powell, Raymond (Ogmore)


Gilbert, Rt Hon Dr John
Prescott, John


Golding, John
Price, C. (Lewisham W)


Graham, Ted
Race, Reg


Hamilton, James (Bothwell)
Radice, Giles


Hamilton, W. W. (C'tral Fife)
Rees, Rt Hon M (Leeds S)


Harman, Harriet (Peckham)
Richardson, Jo


Harrison, Rt Hon Walter
Roberts, Albert (Normanton)






Roberts, Allan (Bootle)
Thomas, Dafydd (Merioneth)


Roberts, Ernest (Hackney N)
Thomas, Dr R. (Carmarthen)


Roberts, Gwilym (Cannock)
Thorne, Stan (Preston South)


Robertson, George
Tilley, John


Robinson, G. (Coventry NW)
Tinn, James


Rooker, J. W.
Torney, Tom


Ross, Ernest (Dundee West)
Varley, Rt Hon Eric G.


Rowlands, Ted
Wainwright, E. (Dearne V)


Ryman, John
Walker, Rt Hon H. (D'caster)


Sever, John
Wardell, Gareth


Sheerman, Barry
Watkins, David


Sheldon, Rt Hon R.
Weetch, Ken


Shore, Rt Hon Peter
Welsh, Michael


Short, Mrs Renée
White, Frank R.


Silkin, Rt Hon J. (Deptford)
Whitehead, Phillip


Silkin, Rt Hon S. C. (Dulwich)
Whitlock, William


Silverman, Julius
Wigley, Dafydd


Skinner, Dennis
Williams, Rt Hon A. (S'sea W)


Snape, Peter
Wilson, Gordon (Dundee E)


Soley, Clive
Wilson, Rt Hon Sir H.(H'ton)


Spellar, John Francis (B'ham)
Wilson, William (C'try SE)


Spriggs, Leslie
Winnick, David


Stallard, A. W.
Woodall, Alec


Stewart, Rt Hon D. (W Isles)
Woolmer, Kenneth


Stoddart, David
Wright, Sheila


Stott, Roger
Young, David (Bolton E)


Strang, Gavin



Straw, Jack
Tellers for the Ayes:


Summerskill, Hon Dr Shirley
Mr. George Morton and


Taylor, Mrs Ann (Bolton W)
Mr. Derek Foster.




NOES


Adley, Robert
Channon, Rt. Hon. Paul


Aitken, Jonathan
Chapman, Sydney


Alexander, Richard
Churchill, W. S.


Alison, Rt Hon Michael
Clark, Hon A. (Plym'th, S'n)


Alton, David
Clark, Sir W. (Croydon S)


Amery, Rt Hon Julian
Clarke, Kenneth (Rushcliffe)


Ancram, Michael
Clegg, Sir Walter


Arnold, Tom
Colvin, Michael


Aspinwall, Jack
Cope, John


Atkins, Rt Hon H.(S'thorne)
Cormack, Patrick


Atkins, Robert(Preston N)
Corrie, John


Baker, Kenneth(St.M'bone)
Costain, Sir Albert


Baker, Nicholas (N Dorset)
Cranborne, Viscount


Beaumont-Dark, Anthony
Crawshaw, Richard


Beith, A. J.
Critchley, Julian


Bendall, Vivian
Crouch, David


Benyon, Thomas (A'don)
Cunningham, G. (Islington S)


Benyon, W. (Buckingham)
Dickens, Geoffrey


Best, Keith
du Cann, Rt Hon Edward


Bevan, David Gilroy
Dunn, Robert (Dartford)


Biffen, Rt Hon John
Dykes, Hugh


Biggs-Davison, Sir John
Eden, Rt Hon Sir John


Blackburn, John
Edwards, Rt Hon N. (P'broke)


Blaker, Peter
Eggar, Tim


Body, Richard
Elliott, Sir William


Bonsor, Sir Nicholas
Ellis, Tom (Wrexham)


Bottomley, Peter (W'wich W)
Emery, Sir Peter


Boyson, Dr Rhodes
Fairbairn, Nicholas


Braine, Sir Bernard
Faith, Mrs Sheila


Bright, Graham
Farr, John


Brinton, Tim
Fenner, Mrs Peggy


Brittan, Rt. Hon. Leon
Finsberg, Geoffrey


Brocklebank-Fowler, C.
Fisher, Sir Nigel


Brooke, Hon Peter
Fletcher, A. (Ed'nb'gh N)


Brotherton, Michael
Fletcher-Cooke, Sir Charles


Brown, Michael(Brigg &amp; Sc'n)
Fookes, Miss Janet


Browne, John (Winchester)
Forman, Nigel


Bruce-Gardyne, John
Fowler, Rt Hon Norman


Bryan, Sir Paul
Fox, Marcus


Buchanan-Smith, Rt. Hon. A.
Fraser, Rt Hon Sir Hugh


Buck, Antony
Fraser, Peter (South Angus)


Budgen, Nick
Freud, Clement


Bulmer, Esmond
Gardiner, George (Reigate)


Burden, Sir Frederick
Gardner, Edward (S Fylde)


Butcher, John
Garel-Jones, Tristan


Carlisle, John (Luton West)
Gilmour, Rt Hon Sir Ian


Carlisle, Kenneth (Lincoln)
Ginsburg, David


Cartwright, John
Glyn, Dr Alan





Goodhart, Sir Philip
Mates, Michael


Goodhew, Sir Victor
Mather, Carol


Gorst, John
Mawby, Ray


Gow, Ian
Mawhinney, Dr Brian


Gower, Sir Raymond
Maxwell-Hyslop, Robin


Grant, John (Islington C)
Mayhew, Patrick


Gray, Hamish
Mellor, David


Greenway, Harry
Meyer, Sir Anthony


Griffiths, E.(B'y St. Edm'ds)
Miller, Hal (B'grove)


Griffiths, Peter Portsm'th N)
Mills Iain (Meriden)


Grimond, Rt Hon J.
Mills Sir Peter (West Devon)


Grist, Ian
Miscampbell, Norman


Grylls, Michael
Mitchell, R. C. (Soton Itchen)


Gummer, John Selwyn
Moate, Roger


Hamilton, Hon A.
Monro, Sir Hector


Hamilton, Michael (Salisbury)
Montgomery, Fergus


Hampson, Dr Keith
Morgan, Geraint


Hannam, John
Morris, M. (N'hampton S)


Haselhurst, Alan
Morrison, Hon C. (Devizes)


Hastings, Stephen
Morrison, Hon P. (Chester)


Havers, Rt Hon Sir Michael
Murphy, Christopher


Hawksley, Warren
Myles, David


Hayhoe, Barney
Neale, Gerrard


Heddle, John
Needham, Richard


Henderson, Barry
Nelson, Anthony


Heseltine, Rt Hon Michael
Neubert, Michael


Hicks, Robert
Newton, Tony


Higgins, Rt Hon Terence L.
Ogden, Eric


Hogg, Hon Douglas (Gr'th'm)
O'Halloran, Michael


Holland, Philip (Carlton)
Onsolw, Cranley


Hooson, Tom
Oppenheim, Rt Hon Dr Mrs S.


Horam, John
Owen, Rt Hon Dr David


Hordern, Peter
Page, Richard (SW Herts)


Howe, Rt Hon Sir Geoffrey
Parkinson, Rt Hon Cecil


Howell, Rt Hon D. (G'ldf'd)
Parris, Matthew


Howells, Geraint
Patten, Christopher (Bath)


Hudson Davies, Gwilym E.
Patten, John (Oxford)


Hunt, David (Wirral)
Pattie, Geoffrey


Hunt, John (Ravensbourne)
Pawsey, James


Hurd, Rt Hon Douglas
Penhaligon, David


Irvine, Rt Hon Bryant Godman
Percival, Sir Ian


Irving, Charles (Cheltenham)
Peyton, Rt Hon John


Jenkin, Rt Hon Patrick
Pink, R. Bonner


Johnson Smith, Sir Geoffrey
Pitt, William Henry


Johnston, Russell (Inverness)
Pollock, Alexander


Jopling, Rt Hon Michael
Prentice, Rt Hon Reg


Joseph, Rt Hon Sir Keith
Price, Sir David (Eastleigh)


Kaberry, Sir Donald
Proctor, K. Harvey


Kellett-Bowman, Mrs Elaine
Pym, Rt Hon Francis


Kimball, Sir Marcus
Raison, Rt Hon Timothy


King, Rt Hon Tom
Rathbone, Tim


Kitson, Sir Timothy
Rees, Peter (Dover and Deal)


Knox, David
Renton, Tim


Lamont, Norman
Rhodes James, Robert


Lang, Ian
Rhys Williams, Sir Brandon


Langford-Holt, Sir John
Ridley, Hon Nicholas


Latham, Michael
Ridsdale, Sir Julian


Lawrence, Ivan
Roberts, M. (Cardiff NW)


Lee, John
Roberts, Wyn (Conway)


Le Marchant, Spencer
Rodgers, Rt Hon William


Lennox-Boyd, Hon Mark
Roper, John


Lewis, Kenneth (Rutland)
Ross, Stephen (Isle of Wight)


Lloyd, Peter (Fareham)
Rossi, Hugh


Luce, Richard
Rost, Peter


Lyell, Nicholas
Royle, Sir Anthony


Lyons, Edward (Bradf'd W)
Rumbold, Mrs A. C. R.


Mabon, Rt Hon Dr J. Dickson
Sainsbury, Hon Timothy


McCrindle, Robert
St. John-Stevas, Rt Hon N.


Macfarlane, Neil
Sandelson, Neville


MacGregor, John
Scott, Nicholas


MacKay, John (Argyll)
Shaw, Giles (Pudsey)


Maclennan, Robert
Shaw, Sir Michael (Scarb')


Macmillan, Rt Hon M.
Shelton, William (Streatham)


McNair-Wilson, M. (N'bury)
Shepherd, Colin (Hereford)


McNair-Wilson, P. (New F'st)
Shepherd, Richard


Madel, David
Shersby, Michael


Major, John
Silvester, Fred


Marland, Paul
Sims, Roger


Marlow, Antony
Skeet, T. H. H.


Marten, Rt Hon Neil
Smith, Cyril (Rochdale)






Smith, Tim (Beaconsfield)
Vaughan, Dr Gerard


Speller, Tony
Viggers, Peter


Spence, John
Waddington, David


Spicer, Jim (West Dorset)
Wainwright, R.(Colne V)


Spicer, Michael (S Worcs)
Wakeham, John


Sproat, Iain
Waldegrave, Hon William


Squire, Robin
Walker, Rt Hon P.(W'cester)


Stanbrook, Ivor
Walker, B. (Perth)


Stanley, John
Walker-Smith, Rt Hon Sir D.


Steel, Rt Hon David
Wall, Sir Patrick


Steen, Anthony
Waller, Gary


Stevens, Martin
Walters, Dennis


Stewart, A.(E Renfrewshire)
Ward, John


Stewart, Ian (Hitchin)
Warren, Kenneth


Stokes, John
Watson, John


Stradling Thomas, J.
Wellbeloved, James


Tapsell, Peter
Wells, Bowen


Taylor, Teddy (S'end E)
Wells, John (Maidstone)


Tebbit, Rt Hon Norman
Wheeler, John


Temple-Morris, Peter
Whitelaw, Rt Hon William


Thatcher, Rt Hon Mrs M.
Whitney, Raymond


Thomas, Mike (Newcastle E)
Williams, D.(Montgomery)


Thompson, Donald
Winterton, Nicholas


Thorne, Neil (Ilford South)
Wolfson, Mark


Thornton, Malcolm
Wrigglesworth, Ian


Townend, John (Bridlington)
Young, Sir George (Acton)


Townsend, Cyril D, (B'heath)



Trippier, David
Tellers for the Noes:


Trotter, Neville
Mr. Anthony Berry and


van Straubenzee, Sir W.
Mr. Robert Boscawen.

Question accordingly negatived.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the motion relating to Ways and Means may be proceeded with, though opposed, until any hour.—[Mr. David Hunt.]

TELECOMMUNICATIONS [MONEY]

Queen's Recommendation having been signified—

Motion made—[Mr. Patrick Jenkin)—and Question put,
That, for the purposes of any Act of the present Session to provide for the appointment of a Director General of Telecommunications and to confer functions on the Director General so appointed, to abolish the exclusive privilege with respect to telecommunications conferred on British Telecommunications by section 12 of the British Telecommunications Act 1981 and to make new provision with respect to the provision of telecommunication services (hereinafter referred to as "the Act"), it is expedient to authorise—

(1) the extinguishment by order of all or any liabilities of the successor company to the Secretary of State in respect of the principal of transferred loans;
(2) the payment out of money provided by Parliament of—

(a) the remuneration of, and any travelling or other allowances payable under the Act to, the Director General of Telecommunications and any staff of the Director, any sums payable under the Act to or in respect of the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of the Act;
(b) any sums required by the Secretary of State for making grants or other payments under the Act or for discharging any liability imposed on him by the Act;
(c) any expenses incurred by the Secretary of State in acquiring securities of the successor company or of any subsidiary of the successor company or rights to subscribe for any such securities;
(d) any administrative expenses incurred by the Secretary of State in consequence of the provisions of the Act;
(e) any increase attributable to the Act in the sums payable out of moneys so provided under any other Act;


(3) the payment out of the National Loans Fund of any sums required by the Secretary of State for making loans under the Act;
(4) any payments into the National Loans Fund or the Consolidated Fund;

and for the purposes of this Resolution "successor company" has the meaning given by the Act and "transferred loan" means any money borrowed or treated as borrowed by British Telecommunications the liability to repay which vests in the successor company by virtue of the Act.

The House divided: Ayes 278, Noes 234.

Division No. 22]
[10.27 pm


AYES


Adley, Robert
Emery, Sir Peter


Aitken, Jonathan
Eyre, Reginald


Alexander, Richard
Fairbairn, Nicholas


Alison, Rt Hon Michael
Faith, Mrs Sheila


Amery, Rt Hon Julian
Farr, John


Ancram, Michael
Fenner, Mrs Peggy


Arnold, Tom
Finsberg, Geoffrey


Aspinwall, Jack
Fisher, Sir Nigel


Atkins, Rt Hon H.(S'thorne)
Fletcher, A. (Ed'nb'gh N)


Atkins, Robert(Preston N)
Fletcher-Cooke, Sir Charles


Baker, Kenneth(St.M'bone)
Fookes, Miss Janet


Baker, Nicholas (N Dorset)
Forman, Nigel


Beaumont-Dark, Anthony
Fowler, Rt Hon Norman


Bendell, Vivian
Fox, Marcus


Benyon, Thomas (A'don)
Fraser, Rt Hon Sir Hugh


Best, Keith
Fraser, Peter (South Angus)


Bevan, David Gilroy
Gardiner, George (Reigate)


Biffen, Rt Hon John
Gardner, Edward (S Fylde)


Biggs-Davison, Sir John
Garel-Jones, Tristan


Blackburn, John
Gilmour, Rt Hon Sir Ian


Blaker, Peter
Glyn, Dr Alan


Body, Richard
Goodhart, Sir Philip


Bonsor, Sir Nicholas
Goodhew, Sir Victor


Bottomley, Peter (W'wich W)
Gorst, John


Boyson, Dr Rhodes
Gow, Ian


Braine, Sir Bernard
Gower, Sir Raymond


Bright, Graham
Gray, Rt. Hon. Hamish


Brinton, Tim
Greenway, Harry


Brittan, Rt. Hon. Leon
Griffiths, E.(B'y St. Edm' ds)


Brooke, Hon Peter
Griffiths, Peter Portsm'th N)


Brotherton, Michael
Grist, Ian


Brown, Michael(Brigg &amp; Sc'n)
Grylls, Michael


Browne, John (Winchester)
Gummer, John Selwyn


Bruce-Gardyne, John
Hamilton, Hon A.


Bryan, Sir Paul
Hamilton, Michael (Salisbury)


Buchanan-Smith, Rt. Hon. A.
Hampson, Dr Keith


Buck, Antony
Hannam, John


Budgen, Nick
Haselhurst, Alan


Bulmer, Esmond
Hastings, Stephen


Burden, Sir Frederick
Havers, Rt Hon Sir Michael


Butcher, John
Hawksley, Warren


Carlisle, John (Luton West)
Hayhoe, Barney


Carlisle, Kenneth (Lincoln)
Heddle, John


Channon, Rt. Hon. Paul
Henderson, Barry


Chapman, Sydney
Heseltine, Rt Hon Michael


Churchill, W. S.
Hicks, Robert


Clark, Hon A. (Plym'th, S'n)
Higgins, Rt Hon Terence L.


Clark, Sir W. (Croydon S)
Hogg, Hon Douglas (Gr'th'm)


Clarke, Kenneth (Rushcliffe)
Holland, Philip (Carlton)


Clegg, Sir Walter
Hooson, Tom


Colvin, Michael
Hordern, Peter


Cope, John
Howe, Rt Hon Sir Geoffrey


Cormack, Patrick
Howell, Rt Hon D. (G I'ldf'd)


Corrie, John
Hunt, David (Wirral)


Costain, Sir Albert
Hunt, John (Ravensbourne)


Cranborne, Viscount
Hurd, Rt Hon Douglas


Critchley, Julian
Irvine, Rt Hon Bryant Godman


Crouch, David
Irving, Charles (Cheltenham)


Dickens, Geoffrey
Jenkin, Rt Hon Patrick


du Cann, Rt Hon Edward
Johnson Smith, Sir Geoffrey


Dunn, Robert (Dartford)
Jopling, Rt Hon Michael


Dykes, Hugh
Joseph, Rt Hon Sir Keith


Eden, Rt Hon Sir John
Kaberry, Sir Donald


Edwards, Rt Hon N. (P'broke)
Kellett-Bowman, Mrs Elaine


Eggar, Tim
Kimball, Sir Marcus


Elliott, Sir William
King, Rt Hon Tom






Kitson, Sir Timothy
Ridley, Hon Nicholas


Knox, David
Ridsdale, Sir Julian


Lamont, Norman
Roberts, M. (Cardiff NW)


Lang, Ian
Roberts, Wyn (conway)


Langford-Holt, Sir John
Rossi, Hugh


Latham, Michael
Rost, Peter


Lawrence, Ivan
Royle, Sir Anthony


Lee, John
Rumbold, Mrs A. C. R.


Le Marchant, Spencer
Sainsbury, Hon Timothy


Lennox-Boyd, Hon Mark
St. John-Stevas, Rt Hon N.


Lewis, Kenneth (Rutland)
Scott, Nicholas


Lloyd, Peter (Fareham)
Shaw, Giles (Pudsey)


Luce, Richard
Shaw, Sir Michael (Scarb')


Lyell, Nicholas
Shelton, William (Streatham)


McCrindle, Robert
Shepherd, Colin (Hereford)


Macfarlane, Neil
Shepherd, Richard


MacGregor, John
Shersby, Michael


MacKay, John (Argyll)
Silvester, Fred


Macmillan, Rt Hon M.
Sims, Roger


McNair-Wilson, M. (N'bury)
Skeet, T. H. H.


McNair-Wilson, P. (New F'st)
Smith, Tim (Beaconsfield)


Madel, David
Speller, Tony


Major, John
Spence, John


Marland, Paul
Spicer, Jim (West Dorset)


Marlow, Antony
Spicer, Michael (S Worcs)


Marten, Rt Hon Neil
Sproat, Iain


Mates, Michael
Squire, Robin


Mather, Carol
Stanbrook, Ivor


Mawby, Ray
Stanley, John


Mawhinney, Dr Brian
Steen, Anthony


Maxwell-Hyslop, Robin
Stevens, Martin


Mayhew, Patrick
Stewart, A.(E Renfrewshire)


Mellor, David
Stewart, Ian (Hitchin)


Meyer, Sir Anthony
Stokes, John


Miller, Hal (B'grove)
Stradling Thomas, J.


Mills, Iain (Meriden)
Tapsell, Peter


Mills, Sir Peter (West Devon)
Taylor, Teddy (S'end E)


Miscampbell, Norman
Tebbit, Rt Hon Norman


Moate, Roger
Temple-Morris, Peter


Monro, Sir Hector
Thatcher, Rt Hon Mrs M.


Montgomery, Fergus
Thompson, Donald


Morgan, Geraint
Thorne, Neil (Ilford South)


Morris, M. (N'hampton S)
Thornton, Malcolm


Morrison, Hon C. (Devizes)
Townend, John (Bridlington)


Morrison, Hon P. (Chester)
Townsend, Cyril D, (B'heath)


Murphy, Christopher
Trippier, David


Myles, David
Trotter, Neville


Neale, Gerrard
Van Straubenzee, Sir W.


Needham, Richard
Vaughan, Dr Gerard


Nelson, Anthony
Viggers, Peter


Neubert, Michael
Waddington, David


Newton, Tony
Wakeham, John


Onslow, Cranley
Waldegrave, Hon William


Oppenheim, Rt Hon Mrs S.
Walker, Rt Hon P. (W'cester)


Page, Richard (SW Herts)
Walker, B. (Perth )


Parkinson, Rt Hon Cecil
Walker-Smith, Rt Hon Sir D.


Parris, Matthew
Wall, Sir Patrick


Patten, Christopher (Bath)
Waller, Gary


Patten, John (Oxford)
Walters, Dennis


Pattie, Geoffrey
Ward, John


Pawsey, James
Warren, Kenneth


Percival, Sir Ian
Watson, John


Peyton, Rt Hon John
Wells, Bowen


Pink, R. Bonner
Wells, John (Maidstone)


Pollock, Alexander
Wheeler, John


Prentice, Rt Hon Reg
Whitelaw, Rt Hon William


Price, Sir David (Eastleigh)
Whitney, Raymond


Proctor, K. Harvey
Williams, D.(Montgomery)


Pym, Rt Hon Francis
Winterton, Nicholas


Raison, Rt Hon Timothy
Wolfson, Mark


Rathbone, Tim
Young, Sir George (Acton)


Rees, Peter (Dover and Deal)



Renton, Tim
Teller for the Ayes:


Rhodes James, Robert
Mr. Anthony Berry and


Rhys Williams, Sir Brandon
Mr. Robert Boscawen.




NOES


Abse, Leo
Anderson, Donald


Allaun, Frank
Archer, Rt Hon Peter


Alton, David
Ashley, Rt Hon Jack





Ashton, Joe
Haynes, Frank


Atkinson, N.(H'gey,)
Healey, Rt Hon Denis


Barnett, Guy (Greenwich)
Heffer, Eric S.


Barnett, Rt Hon Joel (H'wd)
Hogg, N. (E Dunb't'nshire)


Beith, A. J.
Holland, S. (L'b'th, Vauxh'll)


Benn, Rt Hon Tony
Home Robertson, John


Bennett, Andrew(St'kp't N)
Homewood, William


Booth, Rt Hon Albert
Horam, John


Bray, Dr Jeremy
Howell, Rt Hon D.


Brocklebank-Fowler, C.
Howells, Geraint


Brown, R. C. (N'castle W)
Hoyle, Douglas


Brown, Ron (E'burgh, Leith)
Huckfield, Les


Buchan, Norman
Hudson Davies, Gwilym E.


Callaghan, Rt Hon J.
Hughes, Mark (Durham)


Callaghan, Jim (Midd't'n &amp; P)
Hughes, Robert (Aberdeen N)


Campbell, Ian
Hughes, Roy (Newport)


Campbell-Savours, Dale
Janner, Hon Greville


Canavan, Dennis
Jay, Rt Hon Douglas


Cant, R. B.
John, Brynmor


Carter-Jones, Lewis
Johnson, James (Hull West)


Cartwright, John
Johnson, Walter (Derby S)


Clark, Dr David (S Shields)
Johnston, Russell (Inverness)


Cocks, Rt Hon M. (B'stol S)
Jones, Rt Hon Alec (Rh'dda)


Cohen, Stanley
Jones, Barry (East Flint)


Concannon, Rt Hon J. D.
Jones, Dan (Burnley)


Conlan, Bernard
Kaufman, Rt Hon Gerald


Cook, Robin F.
Kerr, Russell


Craigen, J. M. (G'gow, M'hill)
Kilroy-Silk, Robert


Crawshaw, Richard
Lamond, James


Crowther, Stan
Leadbitter, Ted


Cryer, Bob
Leighton, Ronald


Cunliffe, Lawrence
Lestor, Miss Joan


Cunningham, G. (Islington S)
Lewis, Arthur (N'ham NW)


Cunningham, Dr J. (W'h'n)
Lewis, Ron (Carlisle)


Dalyell, Tam
Litherland, Robert


Davies, Rt Hon Denzil (L'lli)
Lofthouse, Geoffrey


Davis, Terry (B'ham, Stechf'd)
Lyons, Edward (Bradf'd W)


Deakins, Eric
Mabon, Rt Hon Dr J. Dickson


Dean, Joseph (Leeds West)
McCartney, Hugh


Dewar, Donald
McDonald, Dr Oonagh


Dixon, Donald
McKelvey, William


Dobson, Frank
MacKenzie, Rt Hon Gregor


Dormand, Jack
Maclennan, Robert


Dubs, Alfred
McMahon, Andrew


Duffy, A. E. P.
McNamara, Kevin


Dunnett, Jack
McTaggart, Robert


Dunwoody, Hon Mrs G.
McWilliam, John


Eadie, Alex
Marks, Kenneth


Ellis, R. (NE D'bysh're)
Marshall, D (G'gow S'ton)


Ellis, Tom (Wrexham)
Marshall, Dr Edmund (Goole)


English, Michael
Marshall, Jim (Leicester S)


Ennals, Rt Hon David
Mason, Rt Hon Roy


Evans, Ioan (Aberdare)
Maxton, John


Evans, John (Newton)
Maynard, Miss Joan


Ewing, Harry
Meacher, Michael


Field, Frank
Mikardo, Ian


Fitch, Alan
Mitchell, Austin (Grimsby)


Fitt, Gerard
Mitchell, R. C. (Soton Itchen)


Flannery, Martin
Morris, Rt Hon C. (O'shaw)


Foot, Rt Hon Michael
Moyle, Rt Hon Roland


Ford, Ben
Newens, Stanley


Foster, Derek
Oakes, Rt Hon Gordon


Foulkes, George
Ogden, Eric


Fraser, J. (Lamb'th, N'w'd)
O'Halloran, Michael


Freeson, Rt Hon Reginald
O'Neill, Martin


Freud, Clement
Orme, Rt Hon Stanley


Garrett, John (Norwich S)
Owen, Rt Hon Dr David


George, Bruce
Palmer, Arthur


Gilbert, Rt Hon Dr John
Park, George


Ginsburg, David
Parker, John


Golding, John
Parry, Robert


Graham, Ted
Pendry, Tom


Grant, John (Islington C)
Penhaligon, David


Grimond, Rt Hon J.
Pitt, William Henry


Hamilton, James (Bothwell)
Powell, Raymond (Ogmore)


Hamilton, W. W. (C'tral Fife)
Prescott, John


Harman, Harriet (Peckham)
Price, C. (Lewisham W)


Harrison, Rt Hon Walter
Race, Reg


Hart, Rt Hon Dame Judith
Radice, Giles


Hattersley, Rt Hon Roy
Rees, Rt Hon M (Leeds S)






Richardson, Jo
Summerskill, Hon Dr Shirley


Roberts, Albert (Normanton)
Taylor, Mrs Ann (Bolton W)


Roberts, Allan (Bootle)
Thomas, Dafydd (Merioneth)


Roberts, Ernest (Hackney N)
Thomas, Mike (Newcastle E)


Roberts, Gwilym (Cannock)
Thomas, Dr R. (Carmarthen)


Robertson, George
Thorne, Stan (Preston South)


Robinson, G. (Coventry NW)
Tilley, John


Rodgers, Rt Hon William
Tinn, James


Rooker, J. W.
Torney, Tom


Roper, John
Varley, Rt Hon Eric G.


Ross, Ernest (Dundee West)
Wainwright, E. (Dearne V)


Ross, Stephen (Isle of Wight)
Wainwright, R. (Colne V)


Rowlands, Ted
Walker, Rt Hon H. (D'caster)


Ryman, John
Wardell, Gareth


Sandelson, Neville
Watkins, David


Sever, John
Weetch, Ken


Sheerman, Barry
Wellbeloved, James


Sheldon, Rt Hon R.
Welsh, Michael


Shore, Rt Hon Peter
White, Frank R.


Short, Mrs Renée
Whitehead, Phillip


Silkin, Rt Hon J. (Deptford)
Whitlock, William


Silkin, Rt Hon S. C. (Dulwich)
Wigley, Dafydd


Silverman, Julius
Williams, Rt Hon A. (S'sea W)


Skinner, Dennis
Wilson, Gordon (Dundee E)


Smith, Cyril (Rochdale)
Wilson, Rt Hon Sir H. (H'ton)


Snape, Peter
Wilsopn, William (C'try SE)


Soley, Clive
Winnick, David


Speller, John Francis (B'ham)
Woodall, Alec


Spriggs, Leslie
Woolmer, Kenneth


Stallard, A. W.
Wrigglesworth, Ian


Steel, Rt Hon David
Wright, Sheila


Stewart, Rt Hon D. (W Isles)
Young, David (Bolton E)


Stoddart, David



Stott, Roger
Teller for the Noes:


Strang, Gavin
Mr. Allen McKay and


Straw, Jack
Mr. George Morton.

Question accordingly agreed to.

Orders of the Day — WAYS AND MEANS

TELECOMMUNICATIONS

Resolved,
That it is expedient to authorise the inclusion in licences for the running to telecommunication systems of conditions requiring the rendering of payments to the Secretary of State.— [Mr. Patrick Jenkin.]

Orders of the Day — STATUTORY INSTRUMENTS, &c.

Mr. Speaker: In order to save the time of the House, I shall put together motions 4 to 10 on the Order Paper.

Motion made, and Question put forthwith pursuant to Standing Order No. 73A(5) (Standing Committee on Statutory Instruments, &amp;c.)

ANIMAL

That the Mink (Keeping) Order 1982, a copy of which was laid before this House on 25th October, in the last Session of Parliament, be approved.
That the Coypus (Keeping) Order 1982, a copy of which was laid before this House on 25th October, in the last Session of Parliament, be approved.

HOUSING (SCOTLAND)

That the draft Housing (Percentage of Approved Expense for Improvement Grants) (Disabled Occupants) (Scotland) Order 1982, which was laid before this House on 4th November, be approved.

HOUSING

That the draft Grants by Local Authorities (Appropriate Percentage and Exchequer Contributions) (No. 2) Order 1982, which was laid before this House on 4th November, be approved.

HOUSING (SCOTLAND)

That the draft Grants by Local Authorities (Percentages and Exchequer Contributions) (Scotland) (No. 2) Order 1982, which was laid before this House on 8th November, be approved.

CUSTOMS AND EXCISE

That the Immature Spirits (Rum) Order 1982 (S.I., 1982, No. 1575), a copy of which was laid before this House on 11th November, be approved.

TERMS AND CONDITIONS OF EMPLOYMENT

That the draft Employment Subsidies Act 1978 (Renewal) (Great Britain) Order 1982, which was laid before this House on 19th October in the last Session of Parliament, be approved.—[Mr. Lang.]

Question agreed to.

Orders of the Day — STATUTORY INSTRUMENTS, &c.

ANIMALS

Ordered,
That, notwithstanding the provisions of paragraph (3) of Standing Order No. 73A (Standing Committees on Statutory Instruments, &amp;c.), the proposed alterations to the Code No. 1 of the Codes of Recommendations for the Welfare of Livestock, relating to cattle, be referred to a Standing Committee on Statutory Instruments, &amp;c.
That, notwithstanding the provisions of paragraph (3) of Standing Order No. 73A (Standing Committees on Statutory Instruments, &amp;c.), the proposed alterations to the Code No. 2 of the Codes of Recommendations for the Welfare of Livestock, relating to pigs, be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Lang.]

Orders of the Day — Oxford Textile Mills

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]

Mr. Tom Benyon: I am glad to have the opportunity to raise a matter of general importance, which relates to Oxford Textile Mills, a company in my constituency. It is the type of company that the Government should do everything to encourage. It employs many of my constituents and has a considerable record of entrepreneurial skill in its ability to seek out opportunities during a difficult recession and to maximise them. I am delighted that it should be employing more people in my constituency.
The issue is of general interest and concerns the way in which my company feels that it has been treated by Her Majesty's Customs and Excise. The debate does not concern the conduct or courtesy displayed by officials of Her Majesty's Customs and Excise. In my view, they have behaved properly throughout according to the guidelines under which they work. It is important that companies and individuals should understand the burden of taxation that they will inevitably suffer. Companies find that the uncertainty of taxation is intolerable. They find it difficult to know whether they can import and sell at the right price, or how to organise their corporate affairs.
Edmund Burke said:
To tax and to please, no more than to love and to be wise, is not given to men.
I am fully aware of that, and so is my constituent company. However, it at least wishes to know the rate of tax that it is to suffer. The tax law should be clear and concise and should be obeyed. In the circumstance that I am about to relate, the law is unclear, inconcise and open to dispute. My constituent company, Oxford Textile Mills, has been importing Jamaican carpets. The dispute falls broadly into three areas. In 1975 the company imported carpet from Jamaica and was taxed in one way. In 1980, having carried out—as the company believed—the identical procedure, it discovered that it was about to be taxed differently, and retrospectively to boot.
The company feels that the interpretation that now seems to be given of the rules under the LOME convention is unfair. Oxford Textile Mills commenced the importation of Jamaican carpets in early 1980. Good value for money was offered, not least because of the tariff preference. The company would not have considered making such low-priced carpet itself but was happy to purchase it from a carpet manufacturer in the Caribbean who badly needed the business to support an efficient, happy, but ailing, plant, which employed about 200 people near Kingston. The company was confident that the product complied with the required regulations not only from its experience in 1975 at all stages in manufacture but from Jamaican Customs verification on the export documentation.
This compliance was later confirmed by the production of a letter from Her Majesty's Customs confirming the fact that back in 1975 the product complied with the regulations. The carpet being imported in 1980 was in one case exactly the same product, and in the other two cases there were style variations of exactly the same manufacture as the carpet imported in 1975 when the

company had been assured that the circumstances were as it believed them to be. The same civil servant—I do not wish to name him—was the Customs officer throughout.
The first communication on 17 March 1981 from Her Majesty's Customs questioning the Lomé convention compliance was enough for the company to suspend further orders from Jamaica. This subsequently resulted in the Jamaican carpet mill having to shed three-quarters of its labour force, and there were untold problems of supply replacements for the company. It was, however, confident that this suspension would be only temporary. Very little correspondence took place between the parties—the company, the Customs and, indeed, the suppliers in Jamaica—from May 1981 until April 1982 other than by my constituents to press for clarification of the rules.
In April of this year, Her Majesty's Customs finally confirmed that it would not allow the tariff preference. Why was there such a delay? The long drawn-out way in which Her Majesty's Customs operated, with little official documentation or detail, gave the company cause for disquiet.
The second part of the argument concerns the actual duty element. The loss of tariff preference meant that my constituent company was faced with a claim of 23 per cent. duty—some £27,440·73 on this specific consignment, 20 months after the company received it. More than a month elapsed between the arrival of the relevant shipment and the first communication from Her Majesty's Customs. Even before that first communication, most of the carpet was sold with a large amount eventually being re-exported. At that time, the company was confident that the interest of Her Majesty's Customs was only a formality, to confirm the status which the company was confident existed.
Now, Her Majesty's Customs doubt, even at this stage, whether my constituent company could reclaim this duty on a re-exported carpet as Oxford Textile Mills did not indicate at the time of import that that might be the case. What an incredible state of affairs. One can well understand the surprise of the company as it felt that there was no duty at the time of import, and thus no reason to make such a statement as duty was not expected to be reclaimed.
The final part of the argument revolves round the interpretation used for Her Majesty's Customs decision, its change of view since 1975, and the total lack of further new supply possibilities from Jamaica with this duty of 23 per cent. being a complete barrier to the continuation of this type of business. These aspects are currently being pursued by the Hon. Hugh L. Shearer, Minister of Foreign Affairs for Jamaica, with the Lomé authorities. I should also mention that before the debate tonight, I had a meeting with Mr. Norman Rae, the Trade Commissioner for Jamaica, who told me that it was difficult for the Jamaican carpet manufacturers to comply with the Customs' authorities wishes—that the backing of the carpet be also made in Jamaica. It is difficult for them to make the backing for the carpet. All they can make is the material which goes on top of the backing.
Mr. Shearer voiced confidence that steps will be taken and that the carpet will not be liable to duty in future. Mr. Norman Rae has doubts about whether that is possible.
I should like Her Majesty's Customs to be clear that my constituents are not arguing that it has no right to change its mind on whether a product meets the Lomé requirements. They are arguing about the backdating of


the decisions to cover imports of 11 February 1981 and the fact that its final decision was not communicated to the company until 28 April 1982. This will cripple the company. It will make it extremely difficult for it to operate. My constituent company has done all that was possible to verify compliance, including checking as hard as it was able with Her Majesty's Customs. It sensibly suspended any additional orders until notice of the final outcome was received. It is unreasonable that anyone should expect that it should incorporate a contingency duty of 23 per cent. in the light of all the firm information that was received at the time.
I realise the great difficulty under which my hon. Friend operates tonight. He is bound by the rules and regulations under which we all have to suffer. I understand—I am sure that my constituency company does—that if it has been caught up in a quirk in the legislation it is difficult to see how my hon. Friend can turn the legislation on its head. I am sure that we all understand that he can do only so much. However, I hope that he will agree that the situation is unsatisfactory. The company is in great distress. It is in great doubt. In the event of it having to pay what might be upwards of £100,000, it will be in great difficulty. I have every reason to suppose that that is not an exaggeration. I do not want to be alarmist, but job opportunities which might have been created may no longer be created. It could be that unemployment will rise in my constituency as a result.
I hope that my hon. Friend will do all that he can to help. I know of the characteristic flexibility and humanity which he employs in reviewing these matters and I hope that he will do all that he can to ensure that the position of my constituency company is eased. Possibly he will be able to clarify the re-exporting position with a view to seeing whether he can help the company in that way and, at worst, to say whether any staged payments for the company might be envisaged. I realise how difficult it might be for him to be positive in his answer tonight, but if he can give an assurance that he will do all that he can to help it will be most welcome to me and my constituent company.

The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): I have every possible sympathy with the problems of Oxford Textile Mills to which my hon. Friend the Member for Abingdon (Mr. Benyon) has drawn the attention of the House. I assure him that Customs and Excise fully understand and sympathise with the problems which have arisen. Unfortunately, I am not sure that I shall be able to offer my hon. Friend a great deal of comfort. Oxford Textile Mills has effectively come up against the rules of the Community and their impact on the importation of goods from the so-called Lomé convention countries.
As my hon. Friend recognised, the carpets which the company imported from Jamaica in February 1981 were admitted free of Customs duty under the terms of the Lomé convention. Otherwise they would have attracted a tariff of 23 per cent. as coming outwith the Community. Goods from Lomé convention countries are admitted into the European Community free of duty provided that they have been either wholly produced or sufficiently worked or processed in qualifying States to satisfy the origin rules laid down in protocol 1 of the Lomé convention.
The entitlement of such goods to preference treatment is established at the time of importation by production to the Customs of a special certificate known as an EUR 1. That certificate must bear a declaration, signed by the exporter, confirming that the goods have met the requirements of the origin rules. It must also have been stamped and certificated by the Customs authorities of the exporting country. That is what happened with the goods from the factory in my hon. Friend's constituency.
Preference is granted at the time of importation on production of the document in order not to hold up trade, but the certifying authorities in the exporting country are unlikely to have had either the resources or the time to make a detailed investigation into all the facts before issuing every EUR 1 certificate. They are not expected to do so.
It is for that reason that the Lomé convention provides for the Customs of the importing country to ask the certifying authority in the exporting country to verify whether the information concerning the origin of the goods is accurate. Those verification inquiries may arise either as a result of random checks, as I am led to believe happened with the carpets that my hon. Friend mentioned, or when the Customs in the importing country— in the United Kingdom in that case—has reason to doubt the accuracy of the declaration.
Because of the risk that a verification inquiry may show that goods admitted to a preference were not entitled to it, it is the practice of Customs and Excise invariably to inform the importer when an inquiry has been launched and to advise him that if the goods turn out not to be entitled to duty-free admission or reduced rate of duty, he will have to pay Customs duty at the full rate. It then informs the importer of the progress of the inquiry and its result.
That is the background. I shall now refer to the carpets imported by Oxford Textile Mills. They were admitted free of duty on 11 February 1981 on production of the EUR 1 certificate, completed by the exporter, a company called Jamaica Carpet Mills, to which my hon. Friend referred, and issued by the Jamaica Customs Department. On 17 March, just over a month after the entry of the carpets, Customs and Excise told Oxford Textile Mills by letter that it had decided to open a verification inquiry.
Of course, under the terms of the relevant Customs documentation, it is spelt out clearly, as the factory must have been aware:
Customs have the right to require verification subsequently by the preference country that the goods did originate as claimed. If such verification reveals that the goods did not in fact originate there in accordance with the origin rules, the importer will be required to pay the full customs charges due.
That should have served as an alert. I think that it did make the people concerned aware, from what my hon. Friend said to the factory, that the goods were under scrutiny.
Customs and Excise asked the Jamaica Customs Department if it could confirm that the manufacture of the carpets was in accordance with the rules laid down. A reply was received from Jamaica, dated 10 April 1981, which mentioned that imported polypropylene primary backing had been used in making the carpets.
The Community rules under the Lomé convention do not allow the use of polypropylene that has been woven into fabric unless it has been made in a Lomé country or in the European Community.


Customs and Excise sent a second letter on 28 May 1981 to the Jamaica Customs Department pointing out that, on the face of it, the use of polypropylene backing, if imported from a country that is not party to the Lomé convention, made the carpets ineligible for preference.

Mr. Benyon: My hon. Friend must be aware that, as I understand it from conversations tonight, Jamaica cannot make backing and must import it. Moreover, my constituents feel that changing the duty on the basis of the backing is rather like changing the duty on a car because the wheels are made of a different substance from the rest of the car. They believe that it is the fabric, not the backing, that is imported.

Mr. Bruce-Gardyne: I am afraid that there does not seem to be any dispute between Customs and Excise and the Jamaican authorities that the incorporation of the backing invalidated the carpets for Lomé convention treatment.
Perhaps I should deal with the point that my hon. Friend made about other similar or identical carpets that the company had previously imported from Jamaica. There is some doubt about the precise constitution of the backing of the previous carpets that are involved in this case. They may have qualified under the Lomé convention rules in a way that the present carpets did not. They may not have done and perhaps should have been called upon for Customs duty. If they did qualify, they were not rolled out. There was no intention to rake back over history.
My hon. Friend mentioned the possibility of £100,000 being at risk. I am not sure of the origin of that figure. I can only assume that it relates to the thought that there would be an attempt to back track previous consignments of carpets that might not have qualified under the Lomé convention rules but which were allowed through, free of duty. I should like to make it quite clear that there is no question under our rules of back tracking. Therefore, the £27,000 that has been quoted in correspondence with the company as its liability to duty is the maximum.
It is freely admitted that a long delay occurred after the letter from Customs and Excise was sent to the Jamaican authorities on 28 May 1981. That was the responsibility of the Jamaican authorities. There was an interminable delay in obtaining any responses from them. They apologised for the delay when, eventually, in March this year, they confirmed that the polypropylene fabric of tariff

heading 51· had been imported from the United States and that its use rendered the carpets ineligible for preferential treatment.
Customs and Excise and I accept that there was a long delay in establishing the appropriate treatment of the carpets. Unfortunately, this provision of the Lomé convention rules provides for the post hoc verification of importation.
I am told that a few years ago an Italian importer challenged the right of the Italian Customs and Excise to reclaim duty in respect of consignments that were subsequently found to be ineligible for Lomé convention treatment. He lost his case hands down.
There is no doubt that under Community and United Kingdom law, duty is reclaimable where it can be established that the goods were not entitled to Lomé convention treatment. The only alternative would be for the importer to pay a substantial deposit. In the overwhelming majority of cases the deposit would not be forfeited, and we feel that most importers would not thank us for going down that road.
Customs and Excise is sympathetic to the firm and the problems that have arisen. I understand that it has offered to discuss arrangements for the payment of the outstanding duty by instalments.
Oxford Textile Mills has said that many of the carpets were subsequently re-exported. Customs and Excise is prepared to consider whether the amount of duty for which the company is liable could be reduced if re-exports to third countries qualify under Community rules for re-export relief. I have asked Customs and Excise to keep me informed on that aspect and we shall look at it with as much sympathy as possible.
I understand the anxiety and distress that has been caused to the firm. My hon. Friend acknowledged that Customs and Excise has applied the rules of the Community, and there is no dispute between the Jamaican authorities and our Customs and Excise about the liability of the carpets to Community duty.
I hope that Oxford Textile Mills will be prepared to enter into consultations with Customs and Excise with a view to arranging an acceptable phasing of the duty payments. Customs and Excise will certainly examine carefully the proposition that part of the duty should not be paid because some carpets were re-exported. I hope that we shall reach an acceptable solution.

Question put and agreed to.

Adjourned accordingly at eight minutes past Eleven o'clock.